§1467b Intermediate Holding Companies

Summary

The Board can make certain older savings-and-loan holding companies set up a new intermediate holding company when those firms do businesses that are not financial. The law uses three key terms: “financial activities” (the kinds of business listed in another rule), “grandfathered unitary savings and loan holding company” (a company that kept older permissions), and “internal financial activities” (inside-company treasury, investment, and employee benefit work and similar affiliate tasks). If a grandfathered company does non-financial business, the Board may require it to put its financial work into an intermediate holding company that is itself a savings-and-loan holding company. The company must do that within 90 days after the transfer date, unless the Board allows more time. The Board must make the company create an intermediate holding company when needed to supervise its financial work properly or to avoid supervising its non-financial businesses. Internal financial activities do not have to move into the intermediate holding company. A company may keep an internal activity if it did that activity in the year before July 21, 2010 and if at least 2/3 of the assets or 2/3 of the revenue from that activity come from the grandfathered company; the Board can review this for undue risk. The parent company must act as a “source of strength” for the intermediate holding company. The Board can examine the companies, require sworn reports, make rules about when an intermediate holding company is required, limit risky transactions between the intermediate holding company and its parent or affiliates, and enforce these rules under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818). Creating an intermediate holding company is treated as a permissible reorganization, and the law does not force a grandfathered company to change its existing activities to fit new permitted-activity lists.