The OCC's action relied on a "loophole" in the Bank Holding Company Act (BHCA) that meant a company only became a "bank holding company" supervised by the Federal Reserve Board if it owned a "bank" that made "commercial loans" (i.e., loans to businesses) and provided "demand deposits" (i.e., checking accounts). A "nonbank bank" could be established to provide checking accounts (but not commercial loans) or commercial loans (but not checking accounts). The company owning the nonbank bank would not be a bank holding company limited to activities "closely related to banking." This permitted Sears, GE, and other commercial companies to own "nonbank banks.". . .
