Close the Shadow Banking Loophole Act

Increased Transparency for Pending Applications: For industrial banks with pending deposit insurance applications submitted on or before September 23, 2021, the bill requires a 90-day public comment period and a public hearing (Section 2(c)(1)). This allows the public to have a voice in the process.

Higher Standards for Application Approval: The bill requires a two-thirds vote of the FDIC Board of Directors to approve certain pending deposit insurance applications (Section 2(c)(1)(B)).

Enhanced Oversight of Parent Companies: Primary financial regulatory agencies are granted authority to conduct examinations and obtain reports from the parent companies of covered industrial loan companies (Section 2(d)(2)(A)). This helps assess the financial condition and risk management systems of these entities.

Promotion of Safety and Soundness: Regulators may impose conditions or restrictions on parent companies or their subsidiaries to promote the safety and soundness of the depository institution (Section 2(d)(2)(B)).

Expanded FDIC Authority: The FDIC is granted authority to require reports and examinations from parent companies of industrial loan companies, similar to the authority held regarding bank holding companies (Section 3(b)(1)).

Strict Approval Deadlines: If the FDIC does not approve certain pending deposit insurance applications before September 30, 2026, those applications will be deemed denied (Section 2(c)(2)).

Restrictions on Corporate Control: The bill directs the appropriate Federal banking agency to disapprove changes in control of an industrial bank, subject to specific exceptions (Section 2(e)(1)).

Increased Regulatory Burdens on Parent Companies: The bill allows regulatory agencies to impose conditions, restrictions, or requirements for reports and examinations on parent companies and their subsidiaries (Section 2(d)(2)(B) and Section 3(b)(1)).