The Limited, Inc. - Page 6




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          other than banking or a business closely related to banking.  See           
          12 U.S.C. sec. 1841 (1994).  In 1987, in part to deal with the              
          problem of “nonbank banks” (institutions regulated as banks but             
          exempt from key provisions of BHCA because of their failure to              
          meet the definition of a bank under BHCA), Congress amended BHCA.           
          See the Competitive Equality Banking Act of 1987 (CEBA), Pub. L.            
          100-86, sec. 1004(b), 101 Stat. 552, 659.3  CEBA broadened the              

          3    S. Rept. 100-19 (1987) accompanied S. 790, 100th Cong. 1st             
          Sess. (1987), which, substantially as passed by the Senate,                 
          became Pub. L. 100-86, 101 Stat. 552 (Competitive Equality                  
          Banking Act of 1987 (CEBA), Pub. L. 100-86, 101 Stat. 552).  See            
          H. Conf. Rept. 100-261 (1987).  Immediately prior to CEBA, the              
          Bank Holding Company Act of 1956 (BHCA), ch. 240, 70 Stat. 133,             
          currently codified at 12 U.S.C. secs. 1841-1850 (1994), defined a           
          “bank” as an institution that both accepted demand deposits and             
          made commercial loans.  12 U.S.C. 1841(c)(1) and (2) (1982).  The           
          Senate Comm. on Banking, Housing, and Urban Affairs (the                    
          Committee) believed that that definition created a loophole (the            
          “nonbank loophole”) for a bank that refrained from one of those             
          two activities and, thus, was not considered a bank for purposes            
          of BHCA.  For instance, the Committee believed that a nonbank               
          bank could offer interest bearing NOW accounts rather than demand           
          deposits and escape regulation under BHCA.  S. Rept. 100-19,                
          supra at 5-6.  The Committee found:                                         
                    The impetus for nonbank banks stems primarily from                
               large diversified companies wanting to invade the                      
               banking business while avoiding the regulatory                         
               restraints of the Bank Holding Company Act.  Thus some                 
               of the nation’s largest retailing, securities, and                     
               insurance companies have been able to enter the banking                
               business through the nonbank loophole while banks are                  
               prevented from entering those businesses by the Bank                   
               Holding Company Act.                                                   
          Id. at 6.  The Committee believed that a failure to close the               
          nonbank loophole would cause a number of problems in the banking            
          system, including creating new competitive inequalities for bank            
          holding companies, whose activities, under BHCA, must be closely            
                                                             (continued...)           




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