Subsidiary of General Motors reapplies for Interstate Commerce Commission authorization
In a recent development, GM Financial, the financial arm of General Motors, has re-submitted its application for an Industrial Loan Company (ILC) charter from the Federal Deposit Insurance Corporation (FDIC). This comes after a brief halt in their quest for the charter, which has been on hold since July 2021 [2].
The application was initially made in December 2020. If approved, GM Financial Bank, as the ILC would be called, would provide stable, cost-effective funding and expand financing options to retail auto consumers, according to Dan Berce, GM Financial's CEO [10].
A Changing Landscape for ILC Applications
The FDIC's approach to ILC applications has undergone significant changes since 2020. Prior to this, the FDIC did not approve any ILC charter applications for more than a decade [1]. However, in 2020, the FDIC approved applications from fintech Square (now Block) and student loan servicer Nelnet [1].
In August 2023, a proposal was made to require ILC charter applicants to prove their independence from their parent firms and demonstrate how they would meet community lending needs. This proposal was withdrawn in July 2025 by the FDIC board, indicating a move away from stricter oversight [1]. Under the acting chairmanship of Travis Hill, starting in January 2025, the FDIC has sought to encourage new bank formations, including ILCs [1].
Controversy and Opposition
Trade groups have spoken out against ILCs. The Independent Community Bankers of America CEO stated that the designation violates the longstanding separation of banking and commerce and leaves dangerous gaps in oversight [3]. Opponents of the ILC charter argue it exempts companies from the definition of a "bank" under the Bank Holding Company Act, allowing them to bypass oversight by the Federal Reserve [8].
Sen. John Kennedy introduced a bill in 2019 to close the loophole that allows ILCs to bypass Federal Reserve oversight [6]. Former Sen. Sherrod Brown introduced a bill in 2023 that would have subjected ILCs to Fed supervision [7].
Notable Figures and Connections
Elon Musk, now a crucial adviser to President Donald Trump, is the owner of Tesla [4]. Bill Donnelly, CEO of the proposed GM Financial Bank, served until 2017 as president of Tesla Finance and vice president of global financial services for the automaker, according to LinkedIn [9].
The FDIC approved Thrivent Financial for Lutherans' ILC charter application last June [1]. Travis Hill, the newly minted FDIC Acting Chair, voted no in July on a proposed rulemaking that would have demanded ILCs operate independently of their parent companies [5].
The timing of GM Financial's withdrawal may have signaled a hope for a less stringent regulatory environment under a Trump administration, according to Michele Alt, a partner at the Klaric Group [8].
As the application process for ILC charters continues to evolve, it will be interesting to see if GM Financial Bank is among the companies that break through and receive approval from the FDIC.
In the evolving landscape of ILC applications, GM Financial Bank is re-submitting its application, hoping for approval from the FDIC and a chance to expand in the finance industry, as mentioned by Dan Berce, the CEO of GM Financial. The FDIC's approach has seen changes since 2020, with new consideration given to ILC applications, as shown by the approvals for fintech Square (now Block) and student loan servicer Nelnet in 2020. Despite opposition from trade groups regarding the separation of banking and commerce, the FDIC, under the acting chairmanship of Travis Hill, has sought to encourage ILC formations since January 2025.
