How could insurance companies get around the restrictive provisions imposed by the bank holding company act of 1956?
A)Through the organizational mechanism of establishing nonbank bank subsidiaries.
B)By opening federally chartered thrifts.
C)By offering credit-related life, accident, health, or unemployment loans.
D)By buying a full-service bank and then divesting its demand deposits or commercial loans.
E)Through the organizational mechanism of establishing nonbank bank subsidiaries and by buying a full-service bank and then divesting its demand deposits or commercial loans.

Question

Quizplus · Accepted Answer

The bank holding company act of 1956 restricted bank holding companies from engaging in nonbanking activities such as insurance. One way insurance companies could get around this restriction was by establishing nonbank bank subsidiaries or buying a full-service bank and then divesting its demand deposits or commercial loans. Therefore, choice E is the best answer as it includes both organizational mechanisms.

How Could Insurance Companies Get Around the Restrictive Provisions Imposed