The ILC and the Reconstruction of U.S. Banking

106 Pages Posted: 17 Aug 2010 Last revised: 20 Oct 2015

See all articles by Mehrsa Baradaran

Mehrsa Baradaran

University of California, Irvine School of Law

Date Written: January 12, 2011


Since the Great Depression, bank regulators in the United States have endeavored to separate banking institutions from commercial firms, believing such separation was necessary for stability and growth. The recent collapse of our financial system indicates that this premise may be false, as Industrial Loan Companies ("ILCs") – the only institutions where commercial firms are permitted to own banks – remain sound. ILCs have persisted throughout U.S. banking history through exceptions and omissions in banking legislation, but the strength and resilience they have exhibited in the current financial collapse are worth investigating and even emulating. This article examines recent controversy surrounding the ILC charter sparked by Wal-Mart''s application to own a bank, and revisits the arguments against the ILC charter in the wake of the current banking collapse. The article concludes that certain banking regulations created within a financial system that is unrecognizable today should be discarded and argues that, based on the past success of ILC banks, integration of commerce and banking would lead to a more stable and diversified financial system.

Keywords: Banking Policy, Finance, Regulation, Administrative Law

Suggested Citation

Baradaran, Mehrsa, The ILC and the Reconstruction of U.S. Banking (January 12, 2011). Southern Methodist University Law Review, Vol. 63, p. 101, 2010, Available at SSRN:

Mehrsa Baradaran (Contact Author)

University of California, Irvine School of Law ( email )

401 E. Peltason Dr.
Ste. 1000
Irvine, CA 92697-1000
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics