Board of Governors of Federal Reserve System v. Investment Co. Institute

In 1956 Congress enacted the Bank Holding Company-Act to control the future expansion of bank holding companies and to require divestment of their nonbanking interests. The Act, however, authorizes the Federal Reserve Board (Board) to allow holding companies to acquire or retain ownership in companies whose activities are “so closely related to banking or managing or controlling banks as to be a proper incident thereto.” In 1972 the Board amended its regulations to enlarge the category of activities that it would regard as “closely related to banking” and therefore permissible for bank…