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119-s-3734119th CongressWALLET

Close the Shadow Banking Loophole Act

Sponsored By: Senator Kennedy, John [R-LA]

Introduced

Summary

Tightens FDIC oversight of industrial banks and their parent companies. The bill would give the FDIC authority to examine parent companies and nonbank subsidiaries, impose conditions to promote safety and soundness, tighten deposit insurance approvals, and create a change‑of‑control regime for industrial banks.

Show full summary
  • Industrial loan companies and their parent firms would face new supervision. The FDIC could require reports, tailored examinations, and enforce conditions on parents and nonbank affiliates.
  • Deposit insurance applications pending on Sept 23, 2021 would get a public 90-day comment period and a public hearing. Those applications could only be approved by a two-thirds vote of the FDIC Board and must be acted on by Sept 30, 2026 or be deemed denied.
  • Potential acquirers would face a stricter change-of-control process with general disapproval except for narrow exceptions. Exceptions include emergency rescues, passive stakes under 25 percent in listed issuers, and buyers already supervised as bank holding companies.

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 3 benefits, 0 costs, 0 mixed.

Block most industrial bank takeovers

This bill would require federal banking agencies to disapprove changes in control of industrial banks by default. Only a few narrow exceptions would be allowed. Exceptions include a buyer rescuing a bank the agency finds is in danger of default, a purchase that leaves the buyer with under 25% of any voting class and no control, or a buyer already supervised by the Federal Reserve as a bank or savings and loan holding company. Any allowed takeover would still need all other required federal or state approvals. If enacted, these rules would take effect on enactment.

Supervise industrial bank parent companies

This bill would give a primary federal regulator authority to supervise parent companies of industrial loan companies whose FDIC insurance was approved after September 23, 2021. The primary agency would be the agency named under section 2 of the Dodd-Frank Act for the parent, or the FDIC if Dodd-Frank does not apply. That agency would be able to examine the parent and non-bank subsidiaries, require reports, and impose conditions or limits on transactions with the bank to promote safety and soundness. If enacted, these powers would take effect on enactment.

Tighten pending FDIC bank approvals

This bill would change FDIC rules for deposit insurance applications filed on or before September 23, 2021 that are still pending at enactment. For those pending applications, the FDIC would provide a 90-day public comment period and hold a public hearing. The FDIC could approve those applications only by a two-thirds vote of its Board. Any such application not approved by September 30, 2026 would be deemed denied. The bill says these rules would not otherwise limit the FDIC's authority under sections 5 and 6 of the Federal Deposit Insurance Act except where the bill says so.

Sponsors & CoSponsors

Sponsor

Kennedy, John [R-LA]

LA • R

Cosponsors

  • Sen. Kim, Andy [D-NJ]

    NJ • D

    Sponsored 1/29/2026

Roll Call Votes

No roll call votes available for this bill.

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