The Honorable Danny Payne

Commissioner

Texas Department of Savings and Mortgage Lending

2601 North Lamar Blvd.

Austin, TX  78705

RE:  ILC Charters in Texas

Dear Commissioner Payne:

At your request, we are pleased to submit our comments relative to the exploration of creating an alternative charter in Texas similar to the existing Industrial Loan Company (ILC) charter in existence in several states.

The Independent Bankers Association of Texas has had a long and steadfast opposition to the blending of banking and commerce.  One of the features of an ILC is the ability of commercial firms to breach this wall, if even for a limited purpose.

This issue is manifesting itself in the current debate regarding Wal-Mart’s attempt to get into the banking business through the ILC loophole.  Our comment letter on this troublesome application is attached.

We are unable, at this time, to imagine a circumstance where the objectives of a legitimate business plan could not be met with the charter options available at either the state or federal level.  Additionally, we have observed the evolution of various charters over the years to react to changes in consumer demand, technology, regulatory fiat, legislative mandate and/or economic influences.  While seemingly innocuous, a limited purpose charter a la the ILC has the potential to become something much more insidious over time.

Unless there is compelling evidence to the contrary, we would be very much opposed to any legislative initiative to introduce a limited purpose charter in Texas.  Indeed, we are presently exploring legislative options to prohibit ILC entities from branching into Texas.

Thank you for the opportunity to comment, and for the excellent work you and your agency do for the industry and the citizens of Texas.