Silicon Angle: March 19, 2020, Square Gains FDIC Conditional Approval For a Banking License
The bank, Square Financial Services, is expected to launch in 2021 and will operate independently, though as a direct subsidiary of Square. The bank will primarily offer small business loans to Square Capital’s lending business as well as deposit accounts.
“We appreciate the FDIC’s thoughtful approach to our application, and their recognition that Square Capital is uniquely positioned to build a bridge between the financial system and the underserved,” Jacqueline Reses, capital lead at Square, said in a statement. “We’re now focused on the work ahead to buildout Square Financial Services and open our bank to small business customers.”
Some of the critics of Square’s application include Americans for Financial Reform and The National Community Reinvestment Coalition, both of which wrote letters to the FDIC opposing the application. Arguments against the license include claims that the application does not separate banking from commerce, that ILCs pose a significant risk to the financial system, that Square should be subject to the full range of regulations imposed on banks and that Square’s service doesn’t meet the provisions of the Community Reinvestment Act because it doesn’t adequately serve the credit and deposit needs of low- and moderate-income communities.