Corporate Lenders (TGT, HOG, PBI) Could Take A Hit Under Obama's New Rules

June 19, 2009 10:55 AM EDT

The Journal had an interesting piece in today's paper about how Obama's new financial regulation plans could have a negative impact on companies that loan out to consumers looking to purchase their product.

Target Corp. (NYSE: TGT), Harley-Davidson (NYSE: HOG), Pitney Bowes (NYSE: PBI) and dozens of other companies that aren't banks but pitch loans and other financial offerings may be hurt by the Obama administration's new plans.

One proposal the White House is pushing takes aim at industrial loan companies, which are allowed under their state-issued charters to collect federally insured deposits, offer credit cards, make loans and process financial transactions without facing as much scrutiny as traditional banks regulated by the U.S. government.

Obama wants companies with ILC charters to register as bank-holding companies with the Federal Reserve. That would put them in the same regulatory category as Bank of America Corp. (NYSE: BAC) and J.P. Morgan Chase (NYSE: JPM) subjecting the non-banks to much greater government oversight.

If that does occur, most companies with ILC charters would close them down, which would potentially shut off another source of credit for consumers. They would have to close them down because companies might not be able to satisfy the Fed's capital and other requirements, and thus would be ineligible to become bank-holding companies.

The Journal reported there are approximately 45 ILCs with combined assets of $232.3 billion, according to the FDIC.

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• JPMorgan
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• Barack Obama

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