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.

 Back