Group of professionals discuss finance

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Banking and Finance Law Daily, November 28, 2017

Noreika questions value of bank holding companies

By Andrew A. Turner, J.D.

"Bank holding companies may have outlived their practical business value in our financial system and may, in fact, be obsolete," according to First Deputy Comptroller of the Currency Keith Noreika. While bank holding companies may continue to serve a purpose for large companies that conduct complex activities, he sees less value for more traditional banking firms.

Speaking before the American Enterprise Institute on the day of his resignation from government service after serving as Acting Comptroller until a permanent agency head was in place, Noreika said that the holding company structure is not necessary as a tool to manage systemic risk. Evolving regulatory changes have diminished the value of bank holding companies, while costs have increased with duplicative regulation, in his opinion.

Noreika gave the case of the Bank of the Ozarks as an example of why smaller banking companies are eliminating their holding companies. Bank of the Ozarks, a state non-member bank, merged its holding company into the bank citing benefits through consolidated governance and organizational structure.

Noting that for most bank holding companies, the bank usually makes up the vast majority of the company’s assets and activities, Noreika observed that "many community and regional banking organizations are realizing that the extra and duplicative costs of maintaining a holding company make little business and economic sense." In addition to the trend limiting bank holding companies to activities that are financial in nature, he also pointed to costly prudential requirements under the Dodd-Frank Act as impediments to bank holding company flexibility.

Noreika contended that Congress could reduce regulatory redundancy by giving the regulator of the depository institution sole examination and enforcement authority when a depository institution constitutes a substantial portion of its holding company’s assets. Another suggested approach to the problem of multiple regulators would be to eliminate statutory impediments for firms that want to operate without a holding company, such as modernizing corporate governance requirements for national banks.

Companies: American Enterprise Institute

MainStory: TopStory BankHolding BankingOperations DoddFrankAct PrudentialRegulation

Back to Top

Banking and Finance Law Daily

Introducing Wolters Kluwer Banking and Finance Law Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.


A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.