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ICBA urges FDIC to reject Nelnet's federal deposit insurance application

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ICBA urges FDIC to reject Nelnet's federal deposit insurance application

The Independent Community Bankers of America requested that the Federal Deposit Insurance Corp. deny the federal deposit insurance application for Nelnet Bank's proposed industrial loan corporation and impose a two-year moratorium on such future applications.

According to the ICBA's letter to the agency, like SoFi Bank and Square Inc., Nelnet is "designed to avoid the legal restrictions of the Bank Holding Company Act."

According to the ICBA, as Nelnet Bank is applying as an industrial loan corporation and not as a commercial bank, its parent company, Nelnet Inc., can maintain its commercial activities. These include investing in startups and maintaining telecommunications, investment and sports-software businesses. Nelnet, according to the ICBA, should be subject to the same restrictions and supervision as any other bank holding company.

Nelnet Inc. applied with the FDIC and the Utah Department of Financial Institutions to create a Utah-chartered industrial bank. If the charter is granted, Nelnet Bank would operate as an internet bank franchise headquartered in Salt Lake City, focused on making private student loans.