Of Firewalls and Subsidiaries: The Right Stuff for Expanded Bank Activities

New York University School of Law, Center for Law and Business, Working Paper No. 98-017

19 Pages Posted: 10 Jul 1999

See all articles by Bernard Shull

Bernard Shull

City University of New York, CUNY Hunter College - Department of Economics

Lawrence J. White

New York University (NYU) - Leonard N. Stern School of Business, Department of Economics

Date Written: February 1998

Abstract

The extent and structure of non-banking activities for commercial banks has been a long-standing policy concern for the United States. Recently, three alternative models for the undertaking of non-traditional activities -- the universal bank, the separate subsidiary of the holding company, and the operating subsidiary of the bank -- have come to the fore. After reviewing the history of activity restrictions on banks and providing an analytical framework for considering the appropriate structure, we conclude that the "op sub" approach has modest advantages, but that even it carries substantial risks and requires vigorous monitoring and enforcement.

JEL Classification: G21, G28

Suggested Citation

Shull, Bernard and White, Lawrence J., Of Firewalls and Subsidiaries: The Right Stuff for Expanded Bank Activities (February 1998). New York University School of Law, Center for Law and Business, Working Paper No. 98-017. Available at SSRN: https://ssrn.com/abstract=164498 or http://dx.doi.org/10.2139/ssrn.164498

Bernard Shull

City University of New York, CUNY Hunter College - Department of Economics ( email )

695 Park Avenue
New York, NY 10021
United States
609-896-9194 (Phone)

Lawrence J. White (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business, Department of Economics ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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