The Ever-Expanding Business of Banking

Did you know that disease management and mail-order pharmacy activities are part of the business of banking?  Neither did I -- being of the old school when the test for holding company activities was "so closely related to banking as to be a proper incident thereto".  Now of course after GLBA, the test -- with FRB approval is "complementary to a financial activity and does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally."

FDIC requested this ruling to address the erstwhile "Wal*Mart problem" of commercial companies seeking to charter industrial loan company subsidiaries.  Wal*Mart couldn't do it, but WellPoint can.  According to the Federal Reserve Board's Sept. 7, 2007, order, WellPoint, Inc., of Indianapolis, Indiana, filed an application with FDIC to obtain deposit insurance for a proposed de novo industrial loan company (ILC), to be named ARCUS Financial Bank, Salt Lake City, Utah.

WellPoint's primary business is underwriting and selling health insurance.  Pursuant to GLBA, this is "financial in nature".  WellPoint also provides disease management and mail-order pharmacy services through subsidiaries.  The Federal Reserve Board says these activities are complementary to financial services -- so no problem with WellPoint owning an industrial loan company.

Link to Order: http://www.federalreserve.gov/newsevents/press/other/other20070907a1.pdf

(ag) Sept. 10, 2007, in Industrial Loan Companies