The Federal Deposit Insurance Corporation announced on Thursday that it had approved deposit insurance applications from Ford Motor Company and General Motors Company, clearing the way for the auto manufacturers to establish industrial banks and begin providing financial services.
The conditional approvals, which require the companies to stand up lending arms within 12 months, were granted because the firms met the legal requirements, the FDIC said. The banks will both be established in Utah.
The approvals are the latest development in a long-running feud between some companies and the banking industry.
Traditional lenders have argued against so-called “industrial loan charters,” saying it allows commercial firms to improperly engage in banking without sufficient oversight. Proponents of the charters argue it allows firms to provide limited financial services to customers.
Ford said on its website the new bank will be a “long-term strategic initiative that will expand our capabilities, enabling us to offer additional savings options to customers.” It said the bank will take deposits, and add services like certificates of deposit and auto financing in the future.
A spokesperson for General Motors did not immediately respond to a request for comment. When the company submitted its latest banking application in January, it said it would focus on auto lending and deposits.
The Independent Community Bankers of America vocally opposed the applications, arguing in 2022 that Ford’s bid would “skirt regulatory oversight and violate longstanding US policy separating banking and commerce.” Banks that operate under industrial charters are not required to establish bank holding companies, which would subject them to additional oversight from the Federal Reserve.
