Acquisitions and Mergers

 

Under the authority assigned to the Federal Reserve by the Bank Holding Company Act of 1956 as amended, the Bank Merger Act of 1960, and the Change in Bank Control Act of 1978, the Federal Reserve Board maintains broad authority over the structure of the banking system in the United States.

The Bank Holding Company Act assigned to the Federal Reserve primary responsibility for supervising and regulating the activities of bank holding companies. Through this act, Congress sought to achieve two basic objectives: (1) to avoid the creation of a monopoly or the restraint of trade in the banking industry through the acquisition of additional banks by bank holding companies and (2) to keep banking and commerce separate by restricting the nonbanking activities of bank holding companies. Historically, bank holding companies could engage only in banking activities and other activities that the Federal Reserve determined to be closely related to banking. But since the passage of the Gramm-Leach-Bliley Act, a bank holding company that qualifies to become a financial holding company may engage in a broader range of financially related activities, including full scope securities underwriting and dealing, insurance underwriting and sales, and merchant banking. A bank holding company seeking financial holding company status must file a written declaration with the Federal Reserve System, certifying that the company meets the capital, managerial, and other requirements to be a financial holding company.

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