Speaking as the “First Deputy Comptroller of the Currency,” and on his last day of “government service,” former Acting Comptroller of the Currency Keith Noreika said bank holding companies may have outlived their purpose.
Addressing the American Enterprise Institute (AEI), and answering in his remarks the question “Is the Bank Holding Company Act Obsolete?”, Noreika said nothing in law requires the existence of bank holding companies, and the entities “serve no inherent banking purpose.”
“The reasons for enacting the Bank Holding Company Act — which included preventing monopolies, limiting the mixing of banking and commerce, and facilitating geographic expansion in the face of state law restrictions — have largely passed from the scene as federal and state laws have evolved over the past 60-plus years,” Noreika told the group in Washington, D.C.
The former acting comptroller – who relinquished that position with the confirmation by the Senate Nov. 16 of Joseph M. Otting to a five-year term as head of the federal agency that oversees national banks – said that the recent use of bank holding companies to manage systemic risk is neither necessary nor entirely effective.
“What remains is the cost of duplicative regulation and burden that restrict economic potential,” he said. “For those reasons, bank holding companies may have outlived their practical business value in our financial system and may, in fact, be obsolete.”