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An industrial loan company (ILC) or industrial bank is a financial institution in the United States that lends money, and may be owned by non-financial institutions. Though such banks offer FDIC-insured deposits and are subject to FDIC and state regulator oversight, a debate exists to allow parent companies such as Wal-Mart to remain unregulated by the financial regulators. "FDIC-insured entities are subject to Sections 23A and 23B of the Federal Reserve Act, which limits bank transactions with affiliates, including the parent company." (FDIC.gov) The ILC is permitted to have branches in multiple states (which is permitted by many states on a reciprocal basis). They are state-chartered, and insured by the Federal Deposit Insurance Corporation. They are currently chartered by seven states, with most chartered by Utah. Other states permitting them include California, Colorado, Minnesota, Indiana, Hawaii, and Nevada.
Financial institutions, otherwise known as banking institutions, are corporations that provide services as intermediaries of financial markets. Broadly speaking, there are three major types of financial institutions:
The United States of America (USA), commonly known as the United States or America, is a country composed of 50 states, a federal district, five major self-governing territories, and various possessions. At 3.8 million square miles, the United States is the world's third or fourth largest country by total area and is slightly smaller than the entire continent of Europe's 3.9 million square miles. With a population of over 327 million people, the U.S. is the third most populous country. The capital is Washington, D.C., and the largest city by population is New York City. Forty-eight states and the capital's federal district are contiguous in North America between Canada and Mexico. The State of Alaska is in the northwest corner of North America, bordered by Canada to the east and across the Bering Strait from Russia to the west. The State of Hawaii is an archipelago in the mid-Pacific Ocean. The U.S. territories are scattered about the Pacific Ocean and the Caribbean Sea, stretching across nine official time zones. The extremely diverse geography, climate, and wildlife of the United States make it one of the world's 17 megadiverse countries.
The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation providing deposit insurance to depositors in U.S. commercial banks and savings institutions. The FDIC was created by the 1933 Banking Act, enacted during the Great Depression to restore trust in the American banking system. More than one-third of banks failed in the years before the FDIC's creation, and bank runs were common. The insurance limit was initially US$2,500 per ownership category, and this was increased several times over the years. Since the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2011, the FDIC insures deposits in member banks up to US$250,000 per ownership category.
Companies that have set up industrial banks include UBS, General Electric, General Motors, Merrill Lynch, Morgan Stanley, American Express, Target Corp, Nordstrom, Harley-Davidson, First Data, UnitedHealth Group, BMW, and Sallie Mae. In May 2005, Warren Buffett's Berkshire Hathaway, Inc. announced plans to operate a Utah industrial bank to handle consumer loans for its R. C. Willey Home Furnishings stores. The Blue Cross and Blue Shield Association, Ford Motor Co., Ceridian Corp. and Home Depot await approval.
UBS Group AG is a Swiss multinational investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centers as the largest Swiss banking institution in the world. UBS client services are known for their strict bank–client confidentiality and culture of banking secrecy. The bank's large positions in the Americas, EMEA, and Asia Pacific markets make it a global systemically important financial institution.
General Electric Company (GE) is an American multinational conglomerate incorporated in New York and headquartered in Boston. As of 2018, the company operates through the following segments: aviation, healthcare, power, renewable energy, digital industry, additive manufacturing, venture capital and finance, lighting, and oil and gas.
General Motors Company, commonly referred to as General Motors (GM), is an American multinational corporation headquartered in Detroit that designs, manufactures, markets, and distributes vehicles and vehicle parts, and sells financial services, with global headquarters in Detroit's Renaissance Center. It was originally founded by William C. Durant on September 16, 1908 as a holding company. The company is the largest American automobile manufacturer, and one of the world's largest. As of 2018, General Motors is ranked #10 on the Fortune 500 rankings of the largest United States corporations by total revenue.
Top Ten FDIC-Insured Industrial Banks by Assets, 2005 ($ millions).
|1||Merrill Lynch Bank USA||UT||$60,367.7|
|2||UBS Bank USA||UT||$18,585.8|
|3||American Express Centurion Bank||UT||$15,933.0|
|4||Fremont Investment & Loan||CA||$11,316.4|
|5||Morgan Stanley Bank||UT||$8,674.9|
|6||USAA Savings Bank||NV||$7,099.6|
|7||GMAC Commercial Mortgage Bank||UT||$4,872.5|
|8||GMAC Automotive Bank||UT||$2,429.5|
|9||Beal Savings Bank||NV||$2,420.2|
|10||Lehman Brothers Commercial Bank||UT||$2,127.2|
Source: Federal Deposit Insurance Corporation. As of 2009, some of these banks are no longer extant.
However, the assets held by an ILC tend to paint an incomplete picture. The actual loan book amount can be considered more important. In this view, for example, UBS would replace Merrill Lynch as number 1.
In 1910, attorney Arthur J. Morris (1881-1973) opened the Fidelity Savings and Trust Company in Norfolk, Virginia, which made small loans to working people under a concept he called the "Morris Plan." Under this lending approach, would-be borrowers had to submit references from two people of like character and earning-power to prove the borrower's creditworthiness, and agreed to repay the loan through the purchase of Installment Thrift Certificates in weekly installments equal to the face value of the loan, less origination and investigative fees.[ dubious ] Morris Plan Banks expanded to more than 100 locations in the United States.
Norfolk is an independent city in the Commonwealth of Virginia in the United States. At the 2010 census, the population was 242,803; in 2017, the population was estimated to be 244,703 making it the second-most populous city in Virginia after neighboring Virginia Beach.
Morris Plan Banks were part of a historic banking system in the United States created to assist the middle class in obtaining loans that were often difficult to obtain at traditional banks. They were established by Arthur J. Morris (1881–1973), a lawyer in Norfolk, Virginia, who noticed the difficulty his working clients had in getting loans. The first was started in 1910 in Norfolk, and the second in Atlanta in 1911.
Morris Plan banks pioneered the use of automotive financing (through arrangements between the Morris Plan Company of America, essentially a holding company for Morris Plan banks, and the Studebaker Corporation), and, through the subsidiary Morris Plan Insurance Society, credit life insurance (which provided for the loan to be repaid in case the borrower died during the term of the loan, with any residue going to the borrower's estate).
Banking in the United States began in the late 1790s along with the country's founding and has developed into highly influential and complex system of banking and financial services. Anchored by New York City and Wall Street, it is centered on various financial services namely private banking, asset management, and deposit security.
A savings and loan association (S&L), or thrift institution, is a financial institution that specializes in accepting savings, deposits, and making mortgage and other loans. The terms "S&L" or "thrift" are mainly used in the United States; similar institutions in the United Kingdom, Ireland and some Commonwealth countries include building societies and trustee savings banks. They are often mutually held, meaning that the depositors and borrowers are members with voting rights, and have the ability to direct the financial and managerial goals of the organization like the members of a credit union or the policyholders of a mutual insurance company. While it is possible for an S&L to be a joint-stock company, and even publicly traded; in such instances it is no longer truly a mutual association, and depositors and borrowers no longer have membership rights and managerial control. By law, thrifts can have no more than 20 percent of their lending in commercial loans — their focus on mortgage and consumer loans makes them particularly vulnerable to housing downturns such as the deep one the U.S. experienced in 2007.
The savings and loan crisis of the 1980s and 1990s was the failure of 1,043 out of the 3,234 savings and loan associations in the United States from 1986 to 1995: the Federal Savings and Loan Insurance Corporation (FSLIC) closed or otherwise resolved 296 institutions from 1986 to 1989 and the Resolution Trust Corporation (RTC) closed or otherwise resolved 747 institutions from 1989 to 1995.
The Canada Deposit Insurance Corporation is a Canadian federal Crown Corporation created by Parliament in 1967 to provide deposit insurance to depositors in Canadian commercial banks and savings institutions. CDIC insures Canadians' deposits held at Canadian banks up to C$100,000 in case of a bank failure. CDIC automatically insures many types of savings against the failure of a financial institution. However, the bank must be a CDIC member and not all savings are insured. CDIC is also Canada's resolution authority for banks, federally regulated credit unions, trust and loan companies as well as associations governed by the Cooperative Credit Associations Act that take deposits.
The Federal Home Loan Banks are 11 U.S. government-sponsored banks that provide reliable liquidity to member financial institutions to support housing finance and community investment. With their members, the FHLBanks represents the largest collective source of home mortgage and community credit in the United States.
Deposit insurance is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due. Deposit insurance systems are one component of a financial system safety net that promotes financial stability.
The Banking Act of 1933 was a statute enacted by the United States Congress that established the Federal Deposit Insurance Corporation (FDIC) and imposed various other banking reforms. The entire law is often referred to as the Glass–Steagall Act, after its Congressional sponsors, Senator Carter Glass (D) of Virginia, and Representative Henry B. Steagall (D) of Alabama. The term Glass–Steagall Act, however, is most often used to refer to four provisions of the Banking Act of 1933 that limited commercial bank securities activities and affiliations between commercial banks and securities firms. That limited meaning of the term is described in the article on Glass–Steagall Legislation.
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), is a United States federal law enacted in the wake of the savings and loan crisis of the 1980s.
The Federal Deposit Insurance Reform Act of 2005, was an act of the United States Congress on banking regulation. It contained a number of changes to the Federal Deposit Insurance Corporation (FDIC).
All regulated financial institutions in the United States are required to file periodic financial and other information with their respective regulators and other parties. For banks in the U.S., one of the key reports required to be filed is the quarterly Consolidated Report of Condition and Income, generally referred to as the call report or RC report. Specifically, every National Bank, State Member Bank and insured Nonmember Bank is required by the Federal Financial Institutions Examination Council (FFIEC) to file a call report as of the close of business on the last day of each calendar quarter, i.e. the report date. The specific reporting requirements depend upon the size of the bank and whether or not it has any foreign offices. Call reports are due no later than 30 days after the end of each calendar quarter. Revisions may be made without prejudice up to 30 days after the initial filing period. Form FFIEC 031 is used for banks with both domestic (U.S.) and foreign (non-U.S.) offices; Form FFIEC 041 is for banks with domestic (U.S.) offices only.
Bank regulation in the United States is highly fragmented compared with other G10 countries, where most countries have only one bank regulator. In the U.S., banking is regulated at both the federal and state level. Depending on the type of charter a banking organization has and on its organizational structure, it may be subject to numerous federal and state banking regulations. Apart from the bank regulatory agencies the U.S. maintains separate securities, commodities, and insurance regulatory agencies at the federal and state level, unlike Japan and the United Kingdom. Bank examiners are generally employed to supervise banks and to ensure compliance with regulations.
The New York State Banking Department was created by the New York Legislature on April 15, 1851, with a chief officer to be known as the Superintendent. The New York State Banking Department was the oldest bank regulatory agency in the United States.
The Temporary Liquidity Guarantee Program (TLGP) is a program adopted by the Federal Deposit Insurance Corporation (FDIC) on October 13, 2008 during the global financial crisis of 2008 to encourage liquidity in the interbank lending market.
Enterprise Bank is a Florida financial institution headquartered in the North Palm Beach, Florida. The bank has three branches in Palm Beach County.
Donna Tanoue served as the 17th chairperson of the U.S. Federal Deposit Insurance Corporation (FDIC) from May 26, 1998, until July 11, 2001. Subsequently, in April 2002, she became Vice chairperson and Managing Committee member of the Bank of Hawaii.
Aurora Bank is a federal savings bank (FSB) headquartered in Wilmington, Delaware. It is a mid-size bank that offers full-scale banking services. Aurora Bank was founded on January 1, 1921, in Wilmington, Delaware, under the name of Delaware Savings And Loan Association. On January 2, 1958, deposits made to the bank were first insured by the Federal Deposit Insurance Corporation (FDIC). In 1988, the bank was renamed to Delaware Savings Bank, FSB. On April 1, 2009, the bank changed its name to Aurora Bank, FSB. Aurora Bank was a subsidiary of Lehman Brothers Bancorp. In June 2012, Aurora Bank exited most of the financial services business, with accounts transferred to other companies.
This article details the history of banking in the United States. Banking in the United States is regulated by both the federal and state governments.
A bridge bank is an institution created by a national regulator or central bank to operate a failed bank until a buyer can be found for its operations.