What is the Bank Holding Company Supervision Act?

The Bank Holding Company Supervision Act (BHCSA) is a federal law that regulates the activities of bank holding companies (BHCs) operating in the United States. BHCs are entities that own and control two or more banks, known as ‘subsidiaries’. Originally enacted in 1956, the BHCSA was designed to protect the safety of bank deposits and the stability of the U.S. banking system by giving federal regulators, such as the Federal Reserve, additional authority to oversee and regulate the activities of BHCs. Specifically, the BHCSA allows federal regulators to enforce restrictions on BHCs related to mergers and acquisitions, inter-affiliate transactions, corporate governance, and capital structure. In Texas, the BHCSA is enforced by the Texas Department of Banking, which is responsible for the licensing, supervision, and regulation of all state-charted financial institutions. This includes BHCs, which have an added obligation to follow certain state regulations in addition to federal regulations, such as participating in the FDIC’s deposit insurance program. Ultimately, the BHCSA is an important law that helps protect consumers by ensuring the safety and soundness of financial institutions throughout the United States, including those operating in Texas.

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What is the Bank Holding Company Supervision Act?

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