§1831w Safety and Soundness Firewalls Applicable to Financial Subsidiaries of Banks

Summary

Allows an insured State bank to own or control a subsidiary that does certain financial activities only if four rules are met: the State bank and each insured bank affiliate are well capitalized after the required capital deduction; the bank follows the capital deduction and financial statement disclosure rules in section 24a(c); the bank follows the financial and operational safeguards in section 24a(d); and the bank follows the changes to sections 23A and 23B of the Federal Reserve Act made by section 121(b) of the Gramm‑Leach‑Bliley Act. A State bank may keep control of a subsidiary it lawfully controlled or acquired before November 12, 1999, and may keep doing whatever that subsidiary was allowed to do on that date. Definitions: “Subsidiary” means a company that is a subsidiary of one or more insured banks (see 1813(w)(4)); “financial subsidiary” has the meaning in section 24a(g). This does not limit the FDIC’s review power under section 1831a, nor affect the 20th undesignated paragraph of section 9 of the Federal Reserve Act.