Bill Passes to Protect American Economy

Statement

Bill Passes to Protect American Economy

Tonight, the House overwhelmingly passed a bill I sponsored with Financial Services Chairman Barney Frank to restrict commercial companies from owning banks. Some people are unfamiliar with the issue of commercial companies owning banks. However, unbeknownst to them, most Americans are familiar with the effect of commercial companies owning banks. There was a time when commercial companies, such as a modern-day Home Depot, could own banks. And it was the failure of some of these banks which contributed to the massive collapse of the banking system and the crisis of the Great Depression.

Although Congress restricted commercial companies from owning banks, the industrial loan company (ILC) loophole has become the new means to open banking to retailers. It is this loophole which our legislation seeks to close. Because the deposits of banks operating in America are insured by the federal government with up to $100,000 in taxpayer-backed dollars, the mixing of banking and commerce puts taxpayer money at risk if a large commercially-owned bank was to fail.

The risk of letting a commercial company own a bank is simply too high. What if Enron or WorldCom owned a bank? The collapse of a bank owned by a major retailer could easily cost taxpayers billions of dollars.

Chairman Frank and I have been fighting to close the ILC loophole for many years because of the need to maintain the historic separation between banking and commerce. As our legislation continues through the process, I will continue to advocate for the strongest restrictions on the mixing of banking and commerce and look forward to getting a bill to the President by the end of the year.

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