Sample Letter to U.S. Senators
Arlen Specter & Robert P. Casey, Jr.
As a constituent and community banker, I am writing to urge you to co-sponsor and support the Industrial Bank Holding Company Act of 2007 (S.1356), introduced May 10, by Senate Banking Committee Members Sherrod Brown, Tim Johnson and Wayne Allard.
The separation of banking and commerce is one of the pillars of our economic system and has helped make it the envy of the world. Keeping banks and commercial firms separate ensures the impartial allocation of credit, avoids excessive concentration of economic power, and protects American taxpayers against an unwarranted extension of the federal safety net. Think what would have happened if Enron or WorldCom owned a bank.
S.1356 closes the last remaining loophole in banking law that allows non-financial commercial firms to own FDIC-insured institutions, and ensures that owners of industrial banks already in existence are adequately supervised.
Industrial banks are state chartered institutions that exist in only six states. More than half are chartered in Utah. They were originally small, locally owned institutions that were exempt from the Bank Holding Company Act because they had limited deposit taking and lending powers. However, since 1987, industrial bank activities have expanded and their assets have grown more than 3,500 percent to $177 billion.
Wal-Mart recently withdrew its application for an ILC, but that does not diminish the importance of this legislation. Home Depot, Daimler-Chrysler and Cargill still have applications pending. And if the loophole remains open, any commercial firm could seek this charter in the future, including Wal-Mart.
The FDIC board voted unanimously in January to extend its moratorium on ILC applications filed by commercial firms to give Congress time to act. Congress has spoken out clearly against the mixing of banking and commerce, most recently in the Gramm-Leach-Bliley Act of 1999. It is time to re-commit Congress to this policy. Please take advantage of the ILC moratorium to close the ILC loophole once and for all before it irrevocably changes our financial landscape, as it did in Japan which is just recovering from a 15 year recession.
On behalf of my financial institution, our employees and our customers, I urge you to co-sponsor S.1356 and vote for it when it reaches the floor of the Senate.