§1831w Safety and soundness firewalls applicable to financial subsidiaries of banks

Summary

An insured State bank may control or own a company that does the kinds of activities only a national bank can do through a financial subsidiary, but only if four things are true. The bank and each insured affiliate must be well capitalized after the capital deduction required by section 24a(c). The bank must follow the capital deduction and financial-statement disclosure rules in section 24a(c) and the financial and operational safeguards in section 24a(d). The bank must also follow the changes to sections 23A and 23B of the Federal Reserve Act made by section 121(b) of the Gramm-Leach-Bliley Act. A bank that lawfully controlled or bought such a company before November 12, 1999, may keep controlling it and continue the activities that were legal for that company on that date. Definitions: “subsidiary” means a company that is a subsidiary as defined in section 1813(w)(4); “financial subsidiary” has the meaning in section 24a(g). This does not limit the FDIC’s power to review subsidiary activities under section 1831a, and it does not change the applicability of the 20th undesignated paragraph of section 9 of the Federal Reserve Act.