Non-Bank Banks Not Restricted by Federal Reserve, Rules Court

By From , Wire Reports | THE JOURNAL RECORD, January 23, 1986 | Go to article overview

Non-Bank Banks Not Restricted by Federal Reserve, Rules Court


From , Wire Reports, THE JOURNAL RECORD


WASHINGTON - The Federal Reserve Board is not authorized to regulate the increasing limited-service ("non-bank") banks, the U.S. Supreme Court said Wednesday in an important ruling for the financial community.

In an 8-0 decision, the court said the Fed lacks the power to check unrestricted growth of the financial institutions.

The decision enlarges the non-bank bank loophole problem, said Laura Pringle, vice president and general counsel for the Oklahoma Bankers Association. The bankers association had filed a brief in the case supporting the Federal Reserve.

"It's our understanding that Congress didn't act to close the loophole because they expected pending litigation would act to close it," she said.

"Since it did not, we would anticipate that there would be Congressional action to give the Federal Reserve Board the authority it needs, or to specifically plug the non-bank bank loophole."

Congress may still have the final say in the dispute. A House Banking Committee bill to expand the Fed's jurisdiction to include limited-service banks has been bottled up in the House Rules Committee.

Chief Justice Warren E. Burger, writing for the court, said the Fed had expanded the definition of a bank beyond what federal law intended.

""Without doubt there is much to be said for regulating financial institutions that are the functional equivalent of banks,'' he said.

But, he continued, ""Congress defined with specificity certain transactions that constitute banking subject to regulation. The statute may be imperfect but the (Federal Reserve) Board has no power to correct flaws that it perceives in the statute it is empowered to administer.''

Burger said if the law ""falls short of providing safeguards. . .to protect the public interest, that is a problem for Congress, and not the board or the courts, to address.''

The Fed appealed to the Supreme Court for support in closing what the agency considers a loophole in federal banking law.

Non-bank banks provide, among other services, either checking accounts or commercial loans. But they do not provide both as do full-service banks.

They therefore said, and the Supreme Court today agreed, that they are exempt from the federal Bank Holding Company Act which bars interstate ownership of banks. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Non-Bank Banks Not Restricted by Federal Reserve, Rules Court
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.