Banking and Finance Law Daily Wrap Up, DEPOSIT INSURANCE—FDIC OKs deposit insurance applications for Utah Ford Credit, GM Financial banks, (Jan 23, 2026)

By Suzanne Cosgrove

ICBA weighs in against the move, cites “systemic risk” the industrial loan company loophole poses to the banking system.

The board of directors of the Federal Deposit Insurance Corporation (FDIC) has approved deposit insurance applications submitted by Ford Motor Company to establish Ford Credit Bank, and General Motors Company to establish GM Financial Bank. Both will be Utah-chartered industrial banks, the FDIC said.

The Independent Community Bankers of America (ICBA) immediately voiced its opposition to the FDIC’s approvals, stating an industrial loan company (ILC) regulatory loophole poses a systemic risk to the banking system by allowing financial institutions to receive federal deposit insurance while avoiding full regulatory oversight.

“The ILC model is not the innovation proponents claim — it’s a relic of a loophole dating to the 1980s that blurs the line between banking and commerce,” said ICBA President and CEO Rebeca Romero Rainey. “If a company wants to own a bank, it must play by the same rules as everyone else, and anything less is regulatory arbitrage at taxpayer risk.”

As reported previously (See Banking and Finance Law Daily, Nov. 13, 2025), the ICBA maintains that while ILCs are functionally equivalent to full-service banks, their commercial ownership undermines the longstanding U.S. policy of separating banking and commerce. This separation ensures banks function as neutral arbiters of credit, the ICBA says, with lending based on ability to repay rather than commercial interests.

Focused on auto financing. According to the FDIC, Ford Credit Bank’s proposed business model will focus on providing automotive financing products nationwide, primarily through the purchase of retail installment sales contracts from independent Ford dealers. Funding will primarily consist of retail savings accounts and time deposits obtained via the bank’s website and mobile application.

GM Financial Bank’s proposed business model also will focus on providing automotive financing products nationwide, primarily through the purchase of retail installment sales contracts from GMF. Funding will comprise savings accounts and time deposits via the bank’s website and a mobile application.

Statutory framework. In its release announcing the approvals, the FDIC said applications for deposit insurance are evaluated under a statutory framework that includes: 1) the financial history and condition of the institution; 2) the adequacy of the institution’s capital structure; 3) the future earnings prospects of the institution; 4) the general character and fitness of the management of the institution; 5) the risk presented by the institution to the Deposit Insurance Fund; 6) the convenience and needs of the community to be served by the institution; 7) and whether the institution’s corporate powers are consistent with the Federal Deposit Insurance Act.

Ford Credit Bank order. In the FDIC’s order regarding Ford Credit Bank’s application, the regulator said it had reviewed the statutory factors it detailed in Section 6 of the Federal Deposit Insurance (FDI) Act, 12 U.S.C. § 1816 and concluded that it should be approved. It also outlined several conditions, including that the bank should have initial paid-in capital funds of not less than $1,500,000,000, and that the bank’s Tier 1 capital-to-assets leverage ratio (as calculated in accordance with Part 324 of the FDIC Rules and Regulations) should be maintained at not less than 15 percent, that it should meet or exceed the levels required for the bank to be considered “well capitalized” under section 324.403(b) of the FDIC’s Rules and Regulations, 12 CFR § 324.403(b), and maintain an adequate allowance for credit losses.

GM Financial Bank order. Similarly, in its order reviewing GM Financial Bank’s application, the FDIC said it considered the statutory factors it enumerated previously, and GM’s submission should be approved. The FDIC stated that GM’s bank should have initial paid-in capital funds of not less than $667,000,000, and as with Ford Credit Bank, have a Tier 1 capital-to-assets leverage ratio (as calculated in accordance with Part 324 of the FDIC’s Rules and Regulations), which should be maintained at not less than 15 percent. As with Ford Credit Bank, GM Financial will be required to meet or exceed the levels required for the Bank to be considered “well capitalized” under section 324.403(b) of the FDIC’s Rules and Regulations, 12 CFR § 324.403(b) and maintain an adequate allowance for credit losses.

Banks’ statements. Ford applauded the FDIC’s approval. “An industrial bank is a specialized financial institution that allows Ford Credit to offer diverse banking services, most notably the ability to accept insured deposits to fund our operations,” said Cathy O’Callaghan, president and CEO of Ford Credit, in a statement. “This is a long-term strategic initiative that will expand our capabilities,” she said.

“We are thrilled to have earned both the FDIC’s and UDFI’s (Utah Department of Financial Institutions) approval, which both marks the successful completion of a rigorous review process and demonstrates our commitment to compliance and responsible banking,” said Susan Sheffield, president and CEO of GM Financial.

The approvals from the FDIC and UDFI are subject to certain conditions, including compliance with applicable regulations and the terms of the regulators’ approval documents. The FDIC approval orders expire if Ford Credit Bank and GM Financial Bank are not established within 12 months, unless the deadline is extended by the FDIC.

Companies: Independent Community Bankers of America, Ford Credit, GM Financial

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