Permissible Nonbank Activities

Permissible Nonbank Activities

Activities in which a bank holding company may engage that are not retail banking activities, but are close enough that the Federal Reserve permits it anyway. Examples include insurance, the secondary market for mortgages, and investment banking. In order for an activity to be classified as a permissible nonbank activity, the Federal Reserve must declare that engaging in such an activity is in the public interest. Proponents argue that this allows banks to diversify, while critics maintain that this unnecessarily increases risk to bank account holders. See also: Glass-Steagal Act, Gramm-Bliley-Leach Act.