Restrictions on Interstate Banking

This paper will discuss the various restrictions imposed by federal law on interstate banking with regard to branching and bank holding companies. The first part of the paper will examine the federal laws concerning branching activities by banks and how they are affected by the McFadden Act. The second part of the paper will look at the regulation of bank holding companies with regard to interstate expansion by the Douglas Amendment to the Bank Holding Company Act. The third part of the paper will discuss some of the antitrust ramifications of interstate branching and expansion by bank and bank holding companies. The basic aim of this paper is to show how federal banking law concerning interstate branching and expansion has failed to keep up with innovations in the industry and how it has inadequately responded to the recent crisis of bank and savings institution failures.

A Branch bank is not a separate legal entity from its parent bank, having no separate board of directors or capital structure. However, branch banks are separate and distinct business entities, though subject to the supervision of the parent bank. A parent bank is not permitted to treat its branch as a separate, subordinate corporation.

State law is supreme on the subject of branching. From the time the National Currency Act was passed in 1863 until the passage of the McFadden Act in 1927,

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ore 1980, interstate bank ownership was not provided for by state law; it is still prohibited under federal law, except to the extent that a state provides explicit approval. Since 1980, however, this area has been rapidly expanding with respect to law and regulation, with states at the forefront of change. The most common form of interstate bank ownership is that involving bank holding companies. This system consists of independently incorporated banks controlled, either directly or indirectly, by a single association or corporate entity. The controlling organization is usually referred to as a holding company. This holding company may be a key bank which is in control of all the banks. Most states have enacted laws restrictions on the holding of bank stocks by various classes of banks; most have not, however, enacted regulations concerning group banking through non-bank holding companies. In 1956, Congress enacted the Bank Holding Company Act in order "to prevent the concentration of banking resources in the hands of a few giants" and "implement a congressional policy against control of banking and non-banking enterprises by a single business entity." Under this act, a company becomes a bank holding company by acquir
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Some common words found in the essay are:
McFadden Act, Douglas Amendment, Merger Act, Supreme Court, Reserve Board, Company Act, Holding Companies, Act Court, OCC Court, Fifth Circuit, bank holding, holding companies, holding company, bank holding companies, bank holding company, national banks, mcfadden act, nat'l bank, savings associations, federal reserve, douglas amendment, company act, holding company act, bank bank holding, bank merger act,
Approximate Word count = 7012
Approximate Pages = 28 (250 words per page)

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