Companies without a Bank status, but authorized, under their state-issued charters, to collect federally insured deposits, offer credit cards, make loans and process financial transactions are called “Industrial Loan Companies” (ILC). Harley-Davidson, via its lending arm, is one of them. Under their ILC status these companies don’t face as much scrutiny as traditional banks regulated by the U.S. government. So, knowing the excesses of our banks, you imagine the “financial freedom” that these companies enjoy.
President Barack Obama wants to oblige these companies to register as bank-holding companies with the Federal Reserve, facing the same banks stricter oversight. If they refuse or don’t qualify with the Fed’s requirements, the government wants these companies to sell off their lending arms. So, if Harley would refuse, the company would no more be able to lend money to the buyers of its bikes. If Harley lending division would pass the Fed’s requirement and accept the status of bank-holding company, purchase loans would be tougher to get. Of course, you can expect a big fight with Treasury Secretary Timothy Geithner to have this administration proposal removed.
What do you think? Should Harley-Davidson lending practises be supervised by the government? If not, when in financial difficulties, should Harley be bailed out by our government with taxpayers money?