Is the Bank Holding Company Act obsolete?

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Event Summary

At AEI on Tuesday, First Deputy Comptroller of the Currency Keith Noreika spoke on the role that bank holding companies play in the banking industry. He argued that the recent changes in law have decreased the value and increased the costs of bank holding companies and that other Organisation for Economic Co-operation and Development countries — including Canada, the United Kingdom, and Germany — do not use bank holding companies to ensure a healthy financial system.

Following Mr. Noreika’s speech, a panel of experts discussed the need for the Bank Holding Act. George Sutton highlighted the two models for regulating holding corporations, the Federal Reserve model and the bank-centric model, arguing that the bank-centric model has been more successful. Lawrence White of the New York University Stern School of Business pointed out the flaws in financial policy, most notably in the Glass Stegall, Bank Holding, and Dodd-Frank Acts. AEI’s Paul Kupiec provided a historical perspective of the Bank Holding Act, which led to the separation of commercial and investment banking in 1933. He argued that there is no legal or empirical evidence to suggest that banks owned by a Federal Reserve Board–regulated bank holding company are any safer than other banks.

—Ryan Nabil

Event Descripton

In 1956, Congress passed the Bank Holding Company Act to stop interstate banking — a goal that the 1994 Riegle-Neal Act made obsolete. The Bank Holding Company Act subjected bank holding companies to Federal Reserve Board regulation — doubling the number of federal regulatory agencies for most banks — and prohibited mixing bank ownership with ownership of commercial and industrial firms. The Fed’s expansive regulatory powers have fueled investor expectations that large bank holding companies are “too big to fail,” and the act’s prohibition against mixing banking and commerce remains controversial.

Should the Bank Holding Company Act be repealed so bank holding companies are governed by normal corporate law? Is the prohibition against mixing banking and commerce good policy or merely a protection for incumbent bankers? Join AEI as experts address this controversial issue.

Join the conversation on social media with @AEI on Twitter and Facebook.


9:45 AM

10:00 AM
Paul H. Kupiec, AEI

10:05 AM
Keith Noreika, First Deputy Comptroller of the Currency

10:30 AM
Panel discussion

Wayne Abernathy, American Bankers Association
Paul H. Kupiec, AEI
George Sutton, former Utah financial services commissioner
Lawrence White, New York University Stern School of Business

Alex J. Pollock, R Street Institute

11:45 AM

12:00 PM

Event Contact Information

For more information, please contact Ryan Nabil at [email protected], 202.419.5204.

Media Contact Information

For media inquiries or to register a camera crew, please contact [email protected], 202.862.5829

Speaker Biographies

Wayne Abernathy joined the American Bankers Association (ABA) in February 2005 and serves as executive vice president for financial institutions policy and regulatory affairs. He oversees ABA groups that deal with policy development, regulatory and compliance issues, bank general counsels, economics, securities and investment, and risk management. Before joining ABA, Mr. Abernathy served two years as Treasury assistant secretary for financial institutions under President George W. Bush, receiving the Alexander Hamilton Award in recognition of his service. In that office he was also a member of the board of directors of the Securities Investor Protection Corporation. Before his work in the Treasury, he served as staff director of the Senate Banking Committee under Chairman Phil Gramm (R-TX). He previously served as staff director of the Subcommittee on Securities from 1995 to 1998. From 1989 until 1994, he was a Republican economist for the committee. He previously worked as a senior legislative assistant for Sen. Gramm during 1987–89 and as an economist for the Banking Committee’s Subcommittee on International Finance and Monetary Policy during 1981–86. Mr. Abernathy earned his bachelor’s degree in international studies from Johns Hopkins University in 1978. In 1980, he received a master’s degree in international studies from the School of Advanced International Studies of Johns Hopkins University.

Paul H. Kupiec is a resident scholar at AEI, where he studies the management and regulation of banks and financial institutions markets, including issues of systemic risk and the impact of financial regulations on the US economy. Before joining AEI, Dr. Kupiec was director of the Center for Financial Research at the Federal Deposit Insurance Corporation (FDIC) and served as chairman of the research task force of the Basel Committee on Banking Supervision. Before joining the FDIC, he held positions at the International Monetary Fund, Freddie Mac, J. P. Morgan, and the Board of Governors of the Federal Reserve System. Dr. Kupiec has served on the editorial boards of the Journal of Financial Services Research, Journal of Risk, and Journal of Investment Management. He was a member of the Shadow Financial Regulatory Committee.

Keith Noreika became the acting comptroller of the currency on May 5, 2017. Before becoming acting comptroller, he served as a partner in Simpson Thacher & Bartlett LLP and as a member of the firm’s Financial Institutions Practice, where he focused on banking regulation and related litigation. He advised a wide range of domestic and international financial institutions on regulatory issues relating to mergers and acquisitions, minority investments, capital issuances, structuring and compliance activities, and litigation matters, particularly in the area of federal preemption. His experience includes advising regional, multinational, and other banks on the structuring of their operations, including complying with the Volcker Rule, Consumer Financial Protection Bureau regulations, the Bank Secrecy Act, and anti-laundering rules. He has represented national banks before the US Supreme Court, the US Courts of Appeals, and the US District Courts. He previously served as partner at Covington & Burling LLP. He has been an adjunct faculty member at the University of Pennsylvania Law School and the University of Virginia School of Law. He received his juris doctor in 1997 from Harvard Law School, where he was editor of the Harvard Law Review. He earned his bachelor of science from the Wharton School of the University of Pennsylvania in 1994.

Alex J. Pollock is a distinguished senior fellow at the R Street Institute. He was previously a resident fellow at AEI. Before joining AEI, he was president and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004. Mr. Pollock focuses on financial policy issues, including financial cycles, government-sponsored enterprises, housing finance, banking, central banking, uncertainty and risk, retirement finance, corporate governance, and political responses to financial crises. He is the author of “Boom and Bust: Financial Cycles and Human Prosperity” (AEI Press, 2010) and numerous articles and congressional testimonies. Mr. Pollock is a director of CME Group, Great Lakes Higher Education Corporation, and the Great Books Foundation, where he was chairman of the board from 2006 to 2014, and he is a former president of the International Union for Housing Finance.

George Sutton served as the Utah commissioner of financial institutions from 1987 to 1993, where he was responsible for regulating all state-chartered depository institutions and all consumer financial services providers in Utah. Since 1993, Mr. Sutton has specialized in bank regulation. He assists clients with new bank and other regulatory applications, provides compliance reviews of products and services, and advises boards and management on regulation and corporate governance matters. He serves as counsel to two bank trade organizations, where he assists with lobbying and legislative matters. He also serves on the board of directors of a national bank, servicing customers nationwide.

Lawrence White has been with the New York University Leonard N. Stern School of Business for more than 35 years. His primary research areas of interest include financial regulation, antitrust, network industries, international banking, and applied microeconomics. Dr. White has published numerous articles in the Journal of Business, Journal of Economic Perspectives, Journal of Economic Literature, Journal of Political Economy, American Economic Review, Review of Economics and Statistics, Quarterly Journal of Economics, and other leading journals in economics, finance, and law. He is the author of “The S&L Debacle: Public Policy Lessons for Bank and Thrift Regulation” (Oxford University Press, 1992), among other books, and he is the coeditor (with John Kwoka) of the sixth of edition of “The Antitrust Revolution” (Oxford University Press, 2013). He contributed chapters to both of the NYU Stern books on the financial crisis: “Restoring Financial Stability: How to Repair a Failed System” (Wiley, 2009) and “Regulating Wall Street: The Dodd-Frank Act and the New Architecture of Global Finance” (Wiley, 2010). He is the coauthor (with Stern’s Viral Acharya, Matthew Richardson, and Stijn Van Nieuwerburgh) of “Guaranteed to Fail: Fannie Mae, Freddie Mac, and the Debacle of Mortgage Finance” (Princeton University Pres, 2011).


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