Two Distinct Duties: Holding Company vs. Bank Boards
It wasn’t too long ago that banks were restricted from conducting business outside their home state. But some institutions found a workaround: Bank holding companies offered a way to operate in multiple states, leading Congress to pass the Bank Holding Company Act of 1956. Regulators also wanted to limit banks’ ability to own nonbank firms like a manufacturing company or retailer, which could have allowed them to influence borrowers to patronize those subsidiaries or use deposits to make loans to those businesses, according to Joe Mahon of the Federal Reserve Bank of Minneapolis. Interstate banking has been the norm since...
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