The Douglas amendment to the Bank Holding Company was passed to address a potential loophole to interstate banking posed by

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The Douglas amendment to the Bank Holding Company Act was passed in 1956 to address a potential loophole to interstate banking posed by multibank holding companies. Prior to the amendment, these holding companies could acquire banks across state lines and effectively create a network of banks that operated across state borders. The Douglas amendment required that these holding companies be organized in a way that each bank subsidiary was a separate subsidiary of the holding company and subject to regulation by each state where it was located. This limited the ability of multibank holding companies to operate as fully integrated interstate networks.

The Douglas Amendment to the Bank Holding Company Was Passed