Formation and Activities of Financial Holding
Companies
As authorized by the GLB Act, the Federal Reserve Board’s regulations
allow a bank holding company or a foreign banking organization to become a
financial holding company and engage in an expanded array of financial
activities if the company meets certain capital, managerial, and other criteria.
Permissible activities for financial holding companies include conducting
securities underwriting and dealing, serving as an insurance agent and
underwriter, and engaging in merchant banking. Other permissible activities
include those that the Federal Reserve Board, after consulting with the
Secretary of the Treasury, determines to be financial in nature or incidental to
financial activities. Financial holding companies also may engage to a limited
extent in a nonfinancial activity if the Board determines that the activity is
complementary to one or more of the company’s financial activities and would not
pose a substantial risk to the safety or soundness of depository institutions or
the financial system.