WASHINGTON (Reuters) - The U.S. Federal Deposit Insurance Corporation on Wednesday approved separate applications by payment company Square Inc and student loan servicer Nelnet Inc to become banks under a special charter, the first time the agency has granted such licenses in over a decade.
The companies were granted “Industrial Loan Company” charters which allow non-banks to originate loans and collect insured deposits.
The decision is likely to attract major criticism from consumer advocates, banks and Democratic lawmakers, who say the special license is a loophole which poses risks to the banking system and consumers.
Reporting by Michelle Price; Editing by Chris Reese
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