10 Percent Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities — 1994-07-12 [94-16820]

In 1987 and 1989 the Board authorized bank holding companies to establish separate nonbank subsidiaries (``section 20 subsidiaries'') to underwrite and deal in securities that a bank may not underwrite and deal in directly (``ineligible securities''). In order to ensure compliance with section 20 of the Glass-Steagall Act (12 U.S.C. 377), the Board required that the amount of revenue a section 20 subsidiary derives from ineligible securities underwriting and dealing activities may not exceed 10 percent of the total revenue of the subsidiary. Section 20 prohibits a member bank of the Federal Reserve System from being affiliated with a company that is ``engaged principally'' in underwriting and dealing in securities.