Document Type


Publication Title

Villanova Law Review



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Bank Holding Company Act of 1956, BHCA, separation of banking and commerce, nonbanking activity, nonbank subsidiary


The Bank Holding Company Act of 1956 (BHCA) "regulates the acquisition of state and national banks by bank holding companies." The BHCA also regulates the nonbanking activities of bank holding companies and their nonbank subsidiaries. The BHCA was enacted and remains on the books for two fundamental reasons: 1) to prevent undue concentration in banking; and 2) to avoid the mixing of banking with other businesses unrelated to banking (generally called "commerce"). Both of these purposes have been or are being discredited, and it is time to ask whether the BHCA should be repealed. On several levels, banking is combined with commerce and has been both before and after adoption of the BHCA in 1956. It is, nevertheless, regularly asserted when discussing the BHCA that the United States has a long tradition of keeping banking and commerce separate.' This Article questions that assertion. Banking has never been separate from commerce. Their interrelation has only varied throughout our history, depending upon the dates and the types of institutions involved. The Bush Administration proposed a new law to make this more apparent and to make the joinder of banking and commerce more available. Part II of this Article deals with the first issue, concentration and size in banking. It discusses, from a historical perspective, the United State's attitude towards this matter. It places the BHCA among the other statutes and regulations with similar relationships to bank size and concentration. Part III discusses the mixture of banking and commerce, to some extent within banks themselves, but more significantly through holding company systems. Part IV considers the regulation of the banking system without the BHCA burdens and part V suggests some conclusions.