Five years after it first sought an industrial bank charter, Edward Jones is trying again.

The firm last week submitted an application to the Federal Deposit Insurance Corp. and the Utah Department of Financial Institutions to establish Edward Jones Bank, saying that an industrial bank would “enable Edward Jones to serve more clients, more completely.”

The firm had applied for the same type of license, from the same entities, in 2020.

The investment company withdrew that application in 2022, however, citing the “environment” at the time.

Edward Jones wouldn’t be the first nonbank to resubmit an application for an industrial loan company charter since President Donald Trump retook office. GM Financial re-applied in January after initially applying in December 2020 – and gaining conditional approval from the Utah regulator last June. But it pulled the application from FDIC consideration later that month “to address feedback” from the regulator, GM Financial said.

It’s been largely expected that the Trump administration will generally ease financial regulation. Indeed, the FDIC’s new acting chief, Travis Hill, highlighted ILC charters as one way to boost new bank formation, in a speech this month.  

The FDIC is working to issue a request for information to address issues connected to ILC charter applications, Hill said.

“I continue to believe this would be useful,” Hill said, noting the issue draws “strong opinions” from “a wide range of stakeholders across the financial services industry.”

Opponents of the charter have argued the ILC designation exempts companies from the definition of a “bank” under the Bank Holding Company Act, as long as they don’t offer demand deposit accounts. That setup allows them to bypass oversight by the Federal Reserve.

“The Rakutens and the Googles of the world shouldn’t be able to circumvent the Fed,” Sen. John Kennedy, R-LA, said in 2019, introducing a bill to close that “loophole.”

“If they’re allowed to handle your banking services, they’re going to turn into continents,” he said.

Trade groups, too, have spoken out against ILCs. Independent Community Bankers of America CEO Rebeca Romero Rainey has said the designation “violates the longstanding separation of banking and commerce and leaves dangerous gaps in oversight.”

Conversely, now-former Sen. Mitt Romney in March 2024 urged action on pending ILC charter applications, arguing the companies would “provide critical access to credit opportunities within the regulated banking sector. Romney represented Utah, where Edward Jones Bank would be based.

Expanded offerings

Following its new application submission, David Chubak, Edward Jones’ head of branch development and U.S. business, said a banking charter would “simplify our clients' financial lives and reflects our firm's focus on meeting their evolving needs."

“Throughout our 103-year history, Edward Jones has provided a wide range of products, solutions and experiences to our clients," Chubak said in a prepared statement.

Edward Jones already offers banking products, such as margin loans, a securities-based line of credit, credit cards and several cash management options. Later this year, its 19,000 advisers will also begin to offer their U.S. clients checking and credit card products through a co-brand partnership with U.S. Bank, announced last August.

But an ILC charter would allow Edward Jones to offer even more products, including certificates of deposit and an expanded availability of its securities-based credit line.

“Our clients' financial needs are increasingly complex. An affiliated bank would allow us to better meet those needs in order to achieve clients’ long-term financial goals," said Alison Carnie, principal and head of the banking business unit at Edward Jones.

If the charter is approved, veteran banker Andrea Moss will serve as Edward Jones Bank’s CEO, and the bank will be headquartered in Salt Lake City.

Moss is CEO of Nelnet Bank. Nelnet, a student loan servicer, became the first company in several years – along with fintech Square (now Block) – to gain an ILC charter, when it did so in 2020.

At last count, 14 companies have submitted applications since 2017.

In 2020, under former Chair Jelena McWilliams – for whom Hill served as a policy adviser – the FDIC issued a final rule requiring ILC parent companies to enter into a written agreement with the agency pledging to maintain the industrial bank’s capital and liquidity “at levels that the FDIC deems necessary for [their] safe and sound operation.”