Section 603 of the Dodd-Frank Act required the Government Accountability Office (“GAO”) to conduct a study (the “Study”) of those institutions that are exempt from the definition of “bank” under the Bank Holding Company Act (the “BHCA”). In general, the types of institutions exempt from the definition of “bank” under Section 2 of the BHCA (even though their deposits are FDIC-insured) are industrial loan corporations, limited purpose credit card banks, limited purpose trust banks, and savings and loans (whose parent savings and loan holding companies are, after the Dodd-Frank Act, subject to supervision by the FRB). The GAO was directed to consider, among other things, the implications of subjecting companies that control such exempt institutions to the restrictions and requirements of the BHCA.
In the Study, the GAO concluded that removing the BHCA exemption “would likely have a limited impact on the overall credit markets.” The GAO said that its interviews of representatives of exempt institutions and bank regulators left it unclear whether removal of the exemption would lead to improved safety and soundness or strengthened regulatory oversight. The GAO further noted in the Study that representatives from limited purpose credit card banks and industrial loan corporations stated that the parent companies of those institutions would be likely to divest the exempt institution if the BHCA exemption were removed.
The Study provides as an appendix comments from the Department of the Treasury (“Treasury”) on the Study. In Treasury’s comments, Treasury states: