Activities Conducted in Financial Subsidiaries of National Banks
A subsidiary is a business owned by another business. Many corporations and banks have diversified their business focus into subsidiary corporations. In order to be a U.S. National bank, it must be registered with the U.S. Federal Reserve, hold a U.S. Federal charter and be registered with the FDIC. They may hold the initials of NA and NA & SA in their title.
According to the Office of the Comptroller of Currency, Section 5.39 of the financial subsidiary provisions detailed in the Gramm–Leach–Bliley Act of 2000 revises the parameters of CFR 15.34 and 15.36.
In order for a national bank to acquire a subsidiary, it must be at least hold a rating of "satisfactory" by the Community Reinvestment Act examination, be well managed and have adequate capital. This allows a subsidiary to engage in financial activities. Such financial activities can include:
- Real estate, both commercial, residential, international, and agricultural development.
- Business investment, such as SBA, venture capital, angel investing, financial instrument backing for fuel, petroleum, LNG and other consumable commodities.
- Credit card investments, for personal, business and student lines of credit.
- Infrastructure financial backing to rebuild roads, bridges, water works, Green technologies and electrical engineering.
- Educational funding for junior college through post graduate. This also involves university funding for research, and building new colleges or repairing the existing ones.
- Emergency response funding for communities and non-profit organizations to both address existing emergencies as well as to prepare for organizing disaster response for U.S. Federal government, state and local government. This includes HAZMAT, fire departments, local citizen disaster networks, equipment, supplies, training and networking.