Most importantly, any bank holding company wishing to expand had to apply to the Board to do so.
One major reason for the taboo was the view that branching allowed large banks from big cities to compete against state banks in small towns and against national banks which originally were only allowed to operate a single branch.
B No company is a bank holding company by virtue of its ownership or control of shares acquired by it in connection with its underwriting of securities if such shares are held only for such period of time as will permit the sale thereof on a reasonable basis.
A bank holding company could operate branches in multiple states.
That consideration implied a tradeoff. On May 14,the Federal Reserve Board published a proposed rule that it feels would simplify and make more transparent the standards under which the Federal Reserve Board determines that a company controls a banking organization or another company.
A chain bank is a collection of banks owned by an individual or a group of individuals.
While the first two prongs of control — 25 percent or more of any class of voting securities and controlling the election of a majority of the directors — are objective determinations of control, ownership of between 5 and 25 percent of any class of voting securities requires that the Federal Reserve Board review all the facts and circumstances on a case-by-case basis in order to make a control determination.
Banks avoided some of these branching restrictions by forming chain or group banks.