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The Bank Holding Company Act of 1956 (BHCA), ch. 240, 70
Stat. 133, currently codified at 12 U.S.C. secs. 1841-1850
(1994), concerns the ownership of banks. In general, BHCA
prohibits companies that own banks from engaging in any business
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)). 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
(continued...)
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