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H.R. 2176: Return to Prudent Banking Act of 2019

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The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Apr 9, 2019.

Return to Prudent Banking Act of 2019

This bill generally separates the activities of commercial banks and investment banks. Specifically, the bill prohibits an insured depository institution from affiliating with any person or firm engaged principally in, among other things, issuing or selling stocks, bonds, notes, or other securities. Officers, directors and employees of securities firms are prohibited from simultaneously serving as an officer, director, or employee of a depository institution, except in specified circumstances.

No entity issuing or selling stocks, bonds, or other securities may engage in the business of receiving deposits, which includes the establishment and maintenance of transaction accounts.

The bill declares that Congress ratifies the interpretation by the Supreme Court in Investment Company Institute v. Camp (ICI) of specified statutory language regarding permissible activities of banks and securities firms. It further declares that the reasoning of the Court in that case shall continue to apply to the limitations placed upon security affiliations as enacted by this bill. No federal banking agency or federal court shall issue an interpretation regarding such security affiliations that is narrower than that of the Court in ICI.