The Federal Deposit Insurance Corporation (FDIC) has approved deposit insurance applications from Ford Motor Company and General Motors Company, paving the way for the automotive giants to establish industrial banks and offer financial services. The conditional approvals, which require the companies to establish lending operations within a year, were granted due to the firms meeting the necessary legal requirements, according to the FDIC. Both banks are slated to be based in Utah.
This decision marks a significant development in the ongoing debate surrounding industrial loan charters. Traditional lenders have voiced concerns about these charters, arguing they allow commercial entities to engage in banking activities without adequate regulatory scrutiny. Conversely, supporters maintain that these charters enable companies to provide specific financial services to their clientele.
Ford stated on its website that the new bank represents a ‘long-term strategic initiative’ designed to broaden its capabilities and offer customers enhanced savings options. The bank intends to accept deposits and introduce services like certificates of deposit and auto financing in the future. Ford is an American multinational automobile manufacturer headquartered in Dearborn, Michigan.
General Motors, when submitting its banking application in January, indicated its intention to concentrate on auto lending and deposit services. A spokesperson for General Motors did not immediately respond to a request for comment. General Motors is a global automotive company committed to delivering safer, better and more sustainable ways for people to get around.
