by Regulation L is a federal regulation that is issued by the Federal Reserve Board and applies to member banks of the Federal Reserve System. It is also known as the “Bank Holding Company Act” (BHC Act) and it is designed to ensure that bank holding companies and their non-banking subsidiaries are operated in a safe and sound manner and in the best interests of the public.
One of the key provisions of Regulation L is the Special Rules of Practice. These rules apply to the activities of bank holding companies and their non-banking subsidiaries, and they are intended to promote competition and protect consumers from unfair practices.
The Special Rules of Practice include:
- Prohibition against acquisition of control of a bank holding company by a company that is engaged in non-banking activities.
- Prohibitions against the acquisition of control of a bank holding company by a company that engages in discriminatory lending practices.
- Prohibition against the acquisition of control of a bank holding company by a company that engages in unfair or deceptive practices.
The Special Rules of Practice also require bank holding companies to disclose certain information to the Federal Reserve Board before they acquire control of a bank or other financial institution.
The Federal Reserve Board has the authority to approve or disapprove of a proposed acquisition, and it also has the authority to impose conditions or restrictions on the operation of a bank holding company or its non-banking subsidiaries if it determines that the acquisition would be detrimental to the public interest.
The Special Rules of Practice are intended to promote competition and protect consumers from unfair practices, but also to ensure that the companies that control banks are operated in a safe and sound manner, which is in the best interests of the public.
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