Foreword

CHAPTER I-Types of Bank Charters and the Tangle of Regulation

A. The Four Major Types of Banks

B. Commercial Banks

1. National Banks: The Comptroller of the Currency

2. State Banks: State Banking Departments

3. Member Banks: The Federal Reserve System

4. Nonmember State Banks - The Federal Deposit Insurance Corporation

5. Commercial Banks in General: Summary

C. Savings Banks

D. Savings and Loan Associations

1. Aborted End of the Thrift System

E. Credit Unions

E1. Functional Regulation of Securities and Insurance Activities

F. The Special Value of a Bank Charter

1. The Creation of Money

2. "Convenience and Needs" and the Community Reinvestment Act

CHAPTER II-The Dual Banking System

A. The Nature of Dual Banking

1. The Place ofthe Fed

2. Conflict among Regulators

3. Failed Efforts to Simplify the System

4. Overlapping Regulators

5. The Role ofthe S.E.C

6. The Role ofthe State Insurance Regulators

B. National Banks: Origins ofthe Federal Banking Power

C. Harmonization of Law between National and State Banks

1. Federal Adoption of State Law

2. State Law Inapplicable to National Institutions

a. ATM Access Fees

3. State Law Applicable to National Banks

4. Visitation rights

D. The End of the Dual Banking System?

1. FDICIA Restrictions

2. Wild Card Provisions

3. Harmony

CHAPTER IIA-Bank Activities

A. Electronic Banking

1. General

2. Electronic Deposits and Check Presentment

3. Electronic Commerce Generally

4. The Internet

B. Financial Institution Privacy

1. Background

2. The Gramm-Leach Bliley Act of 1999

a. General Rules

b. Exceptions

c. Private Policy Disclosure

d. Enforcement Authority

e. Preemption

3. Fraudulent Access to Information

C. Bank Capital

1. General

2. Large Banks

D. Loans

1. Subprime and Predatory Loans

2. Bank Loans to Single Borrowers

E. Know Your Customer Rule; The Patriot Act

1. Introduction

2. 9/11 and Presidential Order

3. The USA Patriot Act-Substantive Provisions

4. The Patriot Act-Surveillance Procedures

CHAPTER III-Deposits and Accounts: Regulation Q "Deregulation"

A. The Special Nature of Deposits as a Banking Activity

B. State vs. Federal Regulation of Deposits

C. Regulation of Deposit Interest Rates

1. Prohibition of Interest on Demand Deposits

2. Enactment of Reg. Q

3. Temporary Reliefs from Reg. Q

a. Large Balance and Foreign Deposits

b. Mercantile Concerns

4. The Cash Management Account

a. Electronic Capabilities

b. The Legal Controversies

D. NOW Accounts and Checking in Thrift Institutions

1. Invention of the NOW Account

2. Regulation of the NOW Account

E. The End of the Reg.Q

1. The Depository Institutions Deregulation Act of 1980

2. The Money Market Deposit Account

3. Bank Accounts after Deregulation

F. Reserves

1. Expanded Recipients of Fed Services

2. Reduced Benefit in Fed Membership

G. Results of Deregulation

CHAPTER IV-The Price for Money: Usury Rate Laws

A. Changing Perception of Usury Laws

B. Typical Usury Law Structure

1. Basic Usury Rate

2. Large Loans

3. The Penal Law

4. Miscellaneous Provisions

5. Loans to Corporations

6. Reprise

C. National Banks and Usury

1. The Marquette Case and Exporting

2. Riegle-Neal Effect

D. State Bank Utilization of Federal Rates

1. The 1980 Deregulation and Monetary Control Act

2. Greenwood Trust and Its Progeny, Including Smiley

3. Riegle-Neal Effect

E. Federal Law and Usury Rates-Real Estate Loans

F. Thrift Loan Rates

G. Credit Union Loan Rates

H. The Results of a Free Market

CHAPTER V-The Federal Deposit Insurance Corporation

A. The Power of the FDIC

1. The FDIC's Insurance Function

2. The FDIC's Regulatory Function

3. Federal Trade Commission Act Enforcement

B. Full Faith and Credit

C. "Too Big to Fail"

D. The Problem of Lack of Free Market Controls

E. Legislative Reform Proposals

CHAPTER VI-Bank Holding Companies, Bank Subsidiaries and Interstate Banking

A. Concept of the Bank Holding Company

1. Federal Reserve as Regulator

2. One-Bank Holding Companies

3. "Control" of a Bank

B. Structure of Bank Holding Company Act

C. Section 3-Acquisition of Banks

1. Antitrust Tests

2. Relevance of Bank Powers

3. Other Standards to Be Applied

4. The Douglas Amendment

a. The Marquette Case

b. The Northeast Bancorp Case

c. Emergency Acquisitions

5. Riegle-Neal Act of 1994

6. The Expedited Application Process

D. Section 4-Nonbanking Activities

1. "Closely Related to Banking" and an "Incident Thereto"

2. Orders and Reg. Y

a. Closely Related Activities

3. An Example of Evolution: Savings and Loan Acquisitions

4. Another Example: Real Estate Investment Activities

5. The Financial Holding Company

a. Foreign Banks

6. Financial Activities

7. "Closely Related To Banking" and FDICIA

8. Merchant Banking and GLB

E. The Regulation of Subsidiaries

1. Bank Subsidiaries

2. Nonbank Subsidiaries of Bank Subsidiaries

3. National Bank Subsidiaries and Rule 5.34(b)(1)

4. Gramm-Leach-Bliley Resolution

a. National Banks

b. State Bank Subsidiaries

F. An Expanded Use for Firewalls

1. Existing Firewalls

2. Firewalls by Statute: Federal Reserve Act Sections 23Aand23B

3. Firewalls by Regulation

4. Firewalls by Order

5. Reduced Firewalls

G. Tying Restrictions

H. Coordinated Regulation

CHAPTER VII-Branching, Particularly Interstate Branching

A. Brief, Conceptual History

B. Regulation of State Bank Branching

C. Regulation of National Bank Branching

1. The Grand Design of the McFadden Act

a. State Member Banks

b. What Is a "State Bank" under McFadden?

2. Nonbranch Activities

a. Operations Off-Premises

b. The "Definition" of Branch

c. TheLPO

d. TheDPO

e. The Plant City Case

f. Defining a Branch: Clarke v. SIA

3. Electronic Terminals and Today's Networks

D. Riegle-Neal Act of 1994

1. Interstate Mergers

a. State Election to Prohibit

b. State Inaction

c. State Age Laws

d. Concentration Limits

e. Applicable Laws

f. Additional Branches

2. De Novo Branching

3. Encouragement of Coordinated Regulation

4. Prohibition of DPO

E. Antitrust Considerations

F. Edge Act Banks as a Form of Interstate Branching

1. Limitations upon Edge Act Banks

2. Concept of the "International Customer"

G. Thrift Interstate Branching

1. Implied Power to Branch: The North Arlington National Bank Case

2. Governing Thrift Statute and Regulations

3. Emergency Thrift Acquisitions

H. Branches of Foreign Banks

CHAPTER VIII-Bank Securities Operations and The Glass- Steagall Act

A. The Banks and the Securities Business

B. Reason for Glass-Steagall

C. Summary of Glass-Steagall

1. Glass-Steagall Section 16

a. Limitations on Bank Powers Generally

b. Limitations Imposed by Section 16

2. Glass-Steagall Section 5

3. Glass-Steagall Section 21

4. Glass-Steagall Sections 20 and 32

D. Investment in Securities

1. Limitations on National Banks

1a. Subsidiaries of National Banks

2. Limitations on State Nonmember Banks

3. Effect of FDICIA

4. Subsidiaries of State Nonmember Banks

5. Bank Holding Company Affiliates

E. Brokerage of Securities

1. Banks, Recourse,and SIA v. Comptroller of the Currency

2. Nonbanks and Section 4 of the Bank Holding Company Act

3. The Effort for S.E.C. Bank Registration

3A. Functional Regulation

a. The Push Out Effect

4. Combination of Brokerage and Investment Advice

a. Activities by Banks and Their Subsidiaries

b. Activities by Affiliates (Not Subsidiaries) of Member Banks: Section 20

c. Mutual Funds and Brokerage

5. Nondeposit Investment Products

F. Underwriting and Dealing

1. Nature of the Underwriting and Dealing Risks

2. Activities by Nonmember State Banks and Their Affiliates

3. Managing Agent Trust Accounts:Commingling and the Camp Case

a. Creation of Mutual Funds

b. The "Subtle Hazards"

4. The Four Dwarfs

5. Stocks and Bonds-the Real Thing

5A. Gramm-Leach-Bliley Revision

5B. Functional Regulation

6. Commercial Paper

a. Determination as to "Security"

b. Determination as to "Underwriting"

7. Firewalls and Employee Functions

G. The Proper Relationship of Basic Banking and Glass-Steagall... H. Approaches to Ending Glass-Steagall

CHAPTER IX-Insurance Activities

A. Banks and the Insurance Business

A1. Functional Regulation of Insurance

A2. State Regulation of the Insurance Business

B. Central Issue: What Is the Business of Banking?

C. Coercion Risks

C1. National Banks as Insurance Principals

D. National Banks as Insurance Agents

1. Results of Barnett

E. National Banks and Credit Life Insurance

F. Power of State Banks to Offer Insurance

G. FDICIA Limitations on Powers of State Banks

H. Insurance as Closely Related to Banking under the Bank Holding Company Act

H1. GLB Changes in Affiliates Offerings

H2. GLB and Other Federal Preemption

I. Other Aberrations as Banks Do an Insurance Business

1. What Is Insurance?-Annuities

2. Space Leasing

3. Passive Investments

4. Back-Office Services

5. Sales of Customer Lists

J. Prospects for the Future of Insurance and Banking

CHAPTER X-Real Estate Development and Data Processing Activities

A. Real Estate Investment and Development

1. Power of Banks

2. Power of Bank Holding Companies

3. Financial Holding Companies

B. Data Processing Activities

1. Nature of the Activity

2. Power of Banks

3. Power of Bank Holding Companies

CHAPTER XI-Thrifts: S&Ls, Savings Banks, and Credit Unions

A. Concept of Thrift Institutions

B. Savings and Loan Associations

C. Constitutionality of Federal S&Ls

D. TheS&L Disaster

E. Rescuing the S&L Industry

F. S&Ls,Savings Banks,and the Dual Banking System

G. End of the Thrift Dual Banking System

H. NOW Accounts

I. New Powers

J. Mutual and Stock Institutions

K. Thrift Holding Companies

L. Benefits of Thrifts

M. Future of the Thrift Industry

N. Emergency Thrift Acquisitions

O. Credit Unions

1. Deposits in Credit Union Accounts

2. Loans and Other Businesses

3. Taxation of Credit Unions

4. Common-Bond Requirements

a. Occupation

b. Association

c. Community

d. The Credit Union Membership Access Act

5. Consequences of the First National Banks & Trust Company Decision

CHAPTER XII - International Banking

A. General Principles

B. American Banks Abroad

1. Subject to Foreign Regulation and Control

2. Foreign Branching by Federal Instrumentalities

3. Foreign Powers

a. Member Banks, Holding Companies, and Edge Act Banks

b. Non-member State Banks

4. Acquisition of Foreign Banks

5. State Banks Abroad

6. Dollar Deposits in American Banks Abroad

C. American Banks in the European Economic Union

D. Entry by Foreign Banks Into the United States

1. Entry Generally

a. Domestic Branches

b. Agencies

c. Representative Offices

2. Application of the Bank Holding Company Act

3. Federal Reserve Supervision

3A. The Regulation of Financial Conglomerates

4. Interstate Branching

5. Deposit Insurance

INDEX