Fast Facts - Industrial Banking and Commerce
Fast Facts:
Industrial banks do not engage in any activity not allowed for a national bank
Industrial bank holding companies can engage in any lawful activity – no evidence engaging in other activities presents any risk to bank
Affiliate transactions governed by Sections 23A and 23B – bank cannot be used to finance parent or affiliates or be subjected to any undue influence in lending decisions
Large diversified parent companies provide a much higher level of support to a bank subsidiary than most traditional bank holding companies
Capital is usually not an issue for an industrial bank as evidenced by the highest overall industry capital ratios in the nation over a 20-year period
Most industrial banks have no marketing or development costs – business is provided through parent – savings result in highest overall industry profit margins
Industrial bank model has proven successful even when parent company has financial problems – banks have been isolated from problems and continue to operate normally
Parent companies include some of the largest and most successful providers of credit and financial services in the nation – competence and integrity not an issue
Separation of banking and commerce not required until 1950s – required then because of concerns about development of large financial conglomerates that have developed anyway – ultimate effect is a barrier to capital artificially limiting growth of small and medium size banks and increasing foreign ownership of domestic banks
Commercial investment in banks during Great Depression was a key to rebuilding banking industry and nation’s economy – the leading banks in Michigan were organized by General Motors and Ford · Commercial investment in banks today would similarly help restore and revitalize the nation’s credit markets – the banks would be as safe and sound as any others