Close the Shadow Banking Loophole Act

[Congressional Bills 119th Congress] [From the U.S. Government Publishing Office] [S. 3734 Introduced in Senate (IS)] <DOC> 119th CONGRESS 2d Session S. 3734 To address applications for deposit insurance submitted by industrial banks to the Federal Deposit Insurance Corporation, and for other purposes. _______________________________________________________________________ IN THE SENATE OF THE UNITED STATES January 29, 2026 Mr. Kennedy (for himself and Mr. Kim) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs _______________________________________________________________________ A BILL To address applications for deposit insurance submitted by industrial banks to the Federal Deposit Insurance Corporation, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Close the Shadow Banking Loophole Act''. SEC. 2. INDUSTRIAL BANKS. (a) Definitions.--In this section: (1) Appropriate federal banking agency.--The term ``appropriate Federal banking agency'' has the meaning given the term in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)). (2) Corporation.--The term ``Corporation'' means the Federal Deposit Insurance Corporation. (3) Industrial bank.--The term ``industrial bank'' means an entity described in section 2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(H)), as in effect on the day before the date of enactment of this Act. (b) Exception From Definition of Bank.--Section 2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(H)) is amended, in the matter preceding clause (i), by inserting after ``similar institution'' the following: ``which has been approved to receive deposit insurance from the Federal Deposit Insurance Corporation on or before September 23, 2021 (or, with respect to such an entity