NAIB Statement on PayPal Application to Establish an Industrial Bank
Frank Pignanelli, Executive Director of the National Association of Industrial Bankers (NAIB), issued the following statement today regarding the filing of a new industrial bank application with the Federal Deposit Insurance Corporation (FDIC) by PayPal Holdings, Inc.
NAIB supports a rigorous, even-handed, and timely application review process for new industrial bank charters to promote competition, diversification, and financial innovation. Each proposal should be evaluated on its own merits through the FDIC’s and state regulators’ rigorous supervisory process, including full review of capital strength, governance, business model, consumer protections, and the statutory ‘source of strength’ financial requirements for parent companies.
Industrial banks are one of America’s most reliable engines of consumer and small business lending, payments, and community support, with a safety record that is the envy of the banking industry. They consistently serve market needs that other banks do not, including for small manufacturers, gig workers, Main Street businesses, and underserved consumers nationwide.
As consolidation among the largest financial institutions continues to accelerate, the nation’s banking system benefits from more competition, more innovation, and more business models that expand access to credit and payments for American businesses and communities. Industrial banks demonstrate that diversification – including responsible commercial ownership – strengthens the financial system rather than weakens it.
Industrial banks have the strongest safety record in American banking. Since Congress established industrial banks in 1987, only one has failed that resulted in a loss to the FDIC, and no commercially owned industrial bank has ever failed.
NAIB looks forward to the FDIC’s careful review of this application in a manner that advances the agency’s statutory mission and Congressional intent, within a regulatory framework that promotes safety and soundness while allowing responsible new entrants to serve consumers and small businesses.