Title VI: Improvements to Regulation of Bank and Savings Association Holding Companies and Depository Institutions

American Bankers Association Contacts

Denyette DePierro (202) 663-5333
Bob Davis  (202) 663-5588 (SLHCs and MHCs)
Dawn Causey  (202) 663-5434 (SLHC's and MHC's)
Joe Pigg (202) 663-5480 (SLHCs and MHCs)

Dechert LLP Authors

Thomas P. Vartanian  (202) 261-3439
Robert H. Ledig  (202) 261-3454
David L. Ansell  (202) 261-3433
Corey F. Rose  (704) 339-3164


Summary

Title VI contains the Volcker Rule, which severely limits the ability of certain bank and bank-related entities to engage in proprietary trading or invest in hedge funds and private equity funds. Title VI also strengthens the ability of banking agencies to regulate and supervise BHCs and SLHCs, and their non-depository institution subsidiaries, and requires consistent standards to be applied to the examination of bank permissible activities. The Title also places new restrictions on acquisitions that would result in a financial company controlling more than 10% of liabilities as defined in the Act, and requires Fed approval for a financial holding company to acquire a company with consolidated assets of more than $10 billion. The Act also conditions acquisitions and expanded activities authority on achieving high standards of capital and management at the holding company level.

The Title amends Sections 23A and 23B of the Federal Reserve Act to make investment funds for which a bank serves as an investment adviser "affiliates" of the bank and adds several new types of transactions to the list of "covered transactions." The Title tightens lending limit provisions by deeming derivatives and repurchase agreements to be included in the definition of "extension of credit." The Title also seeks to limit "charter shopping" by placing conditions on the ability of troubled institutions to convert to a different type of charter.

Title VI also contains several provisions that increase the powers of financial institutions. Included among these provisions, are an express authorization for SLHCs to conduct the same activities as financial holding companies under certain conditions, the repeal of the prohibition on the payment of interest for business transaction accounts, and the removal of the restrictions on de novo interstate banking.

The following links provide expanded analysis within this section: