Two final rules and two proposed rules issued by the Board of Governors of the Federal Reserve System (the "Federal Reserve") in December 2000 and January 2001 open new doors for domestic bank holding companies and foreign banking organizations that have qualified with the Federal Reserve to become financial holding companies ("FHCs"). These changes permit FHCs to take advantage of certain business models and activities that previously have been closed to them. These changes also give FHCs more freedom and independence in developing new delivery systems for financial products that fit the specific FHC’s needs.
By way of background, the Gramm-Leach-Bliley Act of 1999 permits the formation of FHCs, which are bank holding companies with substantially expanded powers. A bank holding company may elect to become an FHC by filing a written declaration with the Federal Reserve. In order to become an FHC, all of the bank and thrift subsidiaries of the proposed FHC must be well capitalized and
