Bank Holding Company Act of 1956
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The Bank Holding Company Act of 1956 (, et seq.) is a United States Act of Congress that regulates the actions of bank holding companies.
This act required Federal Reserve Board approval for the establishment of a bank holding company and prohibited bank holding companies headquartered in one state from acquiring a bank in another state.
The Bank Holding Company Act of May, 9, 1956 was implemented in response to banks forming bank holding companies in order to own both banking and non-banking businesses. This Act, among other things, generally prohibited a bank holding company from engaging in most non-banking activities or acquiring voting securities of certain companies that are not banks.
However, the interstate restrictions of the BHC act were eradicated by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA). IBBEA allowed interstate mergers between "adequately capitalized and managed banks, subject to concentration limits, state laws and CRA evaluations." Other restrictions which prohibited bank holding companies from owning non-financial institutions were removed in 1999 by Gramm-Leach-Bliley Act. In the United States, financial holding companies are still prohibited from owning non-financial corporations in contrast to Japan and continental Europe where this arrangement is common.
Source: FDIC Important Banking Legislation http://www.fdic.gov/regulations/laws/important/index.html, 2004.
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