The Federal Deposit Insurance Corp. gave conditional approval to deposit insurance applications submitted by Ford Motor Co. and General Motors, clearing the way for the establishment of the proposed Ford Credit Bank and GM Financial Bank as Utah-chartered industrial banks.
The approvals mark a significant milestone for the auto giants, allowing their captive finance arms to fund lending activities with insured retail deposits rather than relying solely on wholesale funding and capital markets. Both approvals are subject to stringent capital and governance requirements.
Ford Credit Bank and GM Financial Bank will focus on nationwide automotive finance, primarily through the purchase of retail installment sales contracts. In Ford’s case, those contracts will be sourced from independent dealers, while GM Financial Bank will buy contracts from GM Financial.
Rather than operating as full-service consumer banks, both institutions plan to fund these activities largely through retail savings accounts and time deposits gathered via digital channels, including bank websites and mobile applications. The model mirrors that of other industrial banks that combine narrow lending strategies with direct-to-consumer deposit gathering.
In approving the applications, FDIC staff determined that the proposed banks satisfied the statutory framework governing deposit insurance approvals. That framework evaluates seven factors, including capital adequacy, earnings prospects, management fitness, risk to the Deposit Insurance Fund, and consistency with the purposes of the Federal Deposit Insurance Act.
Both approvals come with elevated capital expectations. The banks will each be required to maintain a minimum 15% Tier 1 leverage ratio, well above the levels required of most insured depository institutions. In addition, the parent companies must provide ongoing support for their banks’ capital and liquidity positions through formal written agreements.
Those conditions reflect regulators’ sensitivity to the risks associated with industrial bank structures, particularly where commercial firms control insured depositories.
Industrial banks, which are chartered at the state level and exempt from the Bank Holding Company Act, have long been a point of tension in U.S. banking policy. Supporters argue the model promotes competition and innovation by allowing commercial firms to offer financial products under robust prudential oversight. Critics counter that it weakens the traditional separation between banking and commerce.
The FDIC approvals underscore that while the agency remains willing to entertain industrial bank charters, it is doing so with guardrails firmly in place — particularly when systemically important, non-financial parents are involved.
The approval orders for both Ford Credit Bank and GM Financial Bank will expire if the banks are not established within 12 months, unless the FDIC grants an extension. Assuming the institutions launch as planned, the moves could meaningfully reshape how the two automakers fund consumer lending — and may renew broader policy debates over the role of industrial banks in the U.S. financial system.