Distributions Pursuant to Bank Holding Company Act of 1956
Long title
An Act to define bank holding companies, control their future expansion, and require divestment of their nonbanking interests.
Nicknames
Bank Holding Company Act of 1956
Enacted by
the 84th United States Congress
Effective
May 9, 1956
Citations
Public law
84-511
Statutes at Large
70 Stat. 133
Codification
Titles amended
12 U.S.C.: Banks and Banking
U.S.C. sections created
12 U.S.C. ch. 17 § 1841 et seq.
Legislative history
Introduced in the House as H.R. 6227
Passed the House on June 14, 1955 (371–24)
Passed the Senate on April 24, 1956 (58–18, in lieu of S. 2577)
Signed into law by President Dwight D. Eisenhower on May 9, 1956
The Bank Holding Company Act of 1956 (12 U.S.C. § 1841, et seq.) is a United States Act of Congress that regulates the actions of bank holding companies.
The original law (subsequently amended), specified that the Federal Reserve Board of Governors must approve the establishment of a bank holding company and that bank holding companies headquartered in one state are banned from acquiring a bank in another state. The law was implemented, in part, to regulate and control banks that had formed bank holding companies to own both banking and non-banking businesses. The law generally prohibited a bank holding company from engaging in most non-banking activities or acquiring voting securities of certain companies that are not banks.
The interstate restrictions of the Bank Holding Company act were repealed by the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA). The IBBEA allowed interstate mergers between "adequately capitalized and managed banks, subject to concentration limits, state laws and Community Reinvestment Act (CRA) evaluations."
In the United States, financial holding companies continue to be prohibited from owning non-financial corporations in contrast to Japan and continental Europe, where this arrangement is common.
Private equity firms, which solicit funds but are not classified as banks and, more importantly, are not backstopped by the Federal Deposit Insurance Corporation, may acquire large ownership positions in a number of non-bank corporations. That is not a problem since private equity firms are not banks.
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