U.S. bank regulator approves banking charters for Square Inc and Nelnet Inc

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