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BANKING |
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INDUSTRIAL BANKS
Industrial banks, also known as state-chartered industrial loan companies (ILCs), were first formed in the early part of the 20th century to make consumer loans and offer deposit accounts, as part of a move to secure credit for low and moderate income workers. Their growth was spurred by a 1987 federal banking law modification that gave nonbanking companies a way to own FDIC-insured industrial banks. Assets of ILCs increased from $3.8 billion in 1987 to over $217 billion in 2006. There were 60 FDIC-insured ILCs as of March 2007, with 47 chartered in Utah and California. Four other states—Colorado, Minnesota, Hawaii and Nevada—account for the rest. ILCs have broad banking powers and may be owned by firms in other financial services businesses, such as finance companies, credit card issuers and securities firms, as well as by nonfinancial businesses such as automakers and department stores. Some regulators oppose the access to the financial services industry that ILCs provide to nonbanks. BMW, Pitney Bowes and Target all own ILCs. In 2003 California and Colorado passed laws that prohibit nonfinancial firms from owning ILCs.
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TOP TEN FDIC-INSURED INDUSTRIAL BANKS
BY ASSETS, 2007 (1)
($ millions)
Rank |
Bank |
State |
Total assets |
| 1 | Merrill Lynch Bank USA | UT | $61,365.8 |
| 2 | Morgan Stanley Bank | UT | 25,080.0 |
| 3 | UBS Bank USA | UT | 23,370.6 |
| 4 | GMAC Bank | UT | 20,729.5 |
| 5 | American Express Centurion Bank | UT | 20,103.5 |
| 6 | Goldman Sachs Bank USA | UT | 14,971.5 |
| 7 | Fremont Investment & Loan | CA | 13,492.7 |
| 8 | USAA Savings Bank | NV | 5,540.4 |
| 9 | Capmark Bank | UT | 4,739.5 |
| 10 | CIT Bank | UT | 3,557.6 |
(1) As of March 31, 2007.
Source: Federal Deposit Insurance Corporation. |
| - Nine of the top 10 industrial loan companies (ILCs) are owned by firms that are outside the banking sector.
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