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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 the bank itself would be heavily examined by the Federal Deposit Insurance Corporation and state regulators, a debate exists to allow parent companies such as Wal-Mart, which would remain unregulated by the financial regulators, to own such a bank. "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, of which Utah has the most by far according to FDIC, other states permitting them include California, Colorado, Minnesota, Indiana, Hawaii, and Nevada.

Companies that have set up industrial banks include UBS, General Electric Co., General Motors, Merrill Lynch & Co. Inc., Morgan Stanley, American Express Co. Target Corp, Nordstrom, Harley-Davidson, First Data, UnitedHealth Group, 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, automakers Ford Motor Co. and DaimlerChrysler AG, Ceridian Corp.Home Depot and DaimlerChrysler await approval.

Top Ten FDIC-Insured Industrial Banks by Assets, 2005 ($ millions)

Source: Federal Deposit Insurance Corporation.

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.

• FDIC: Advisory Committee on Industrial loan companies
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