ABA-BPI Joint Comment Letter Opposing Rakuten ILC Application

This comment is in response to the Notice of Application for Federal Deposit Insurance and Application for Authorization to Commence Business as an Industrial Bank, published by Rakuten Card Co., Ltd (“Rakuten Card Japan”), a subsidiary of Rakuten, Inc. (“Rakuten”). We understand that Rakuten Card Japan has simultaneously filed this application for federal deposit insurance with the Federal Deposit Insurance Corporation (“FDIC”) to insure the deposits of Rakuten Bank America (“Rakuten Bank”), and an application with the Commissioner of the Utah Department of Financial Institutions to authorize Rakuten Bank to engage in business as a Utah industrial bank (or industrial loan company, “ILC”).

The American Bankers Association (“ABA”) and the Bank Policy Institute (“BPI”, together, the “Associations”) have reviewed the non-confidential portion of the Rakuten Bank interagency charter and federal deposit insurance application (“Application”). We first wish to emphasize that we believe in charter choice, including the option to charter an ILC. Our comments express no diminution of our commitment to our current ILC members. Moreover, we welcome interest in new ILC applications from companies that are primarily financial in nature, such as the application by AmeriNat, which also recently applied for an ILC charter.

The Associations, however, believe that the Application for Rakuten Bank raises significant issues inconsistent with the factors set forth in Section 6 of the Federal Deposit Insurance Act (“FDIA”) that the FDIC must evaluate in connection with an application for deposit insurance for a proposed depository institution.3 As a foundational matter, the Application presents substantial concerns regarding the affiliation of banking and non-financial businesses, the separation of which is a core principle in the structure of financial services regulation in the United States.