Historical Review of Umbrella Supervision by the Board of Governors of the Federal Reserve System

The article reviews legislative history and supervisory practices related to bank holding companies with a view toward understanding what Congress meant by referring to the Board of Governors of the Federal Reserve System as the “umbrella supervisor” in the Gramm-Leach-Bliley Act. The first part of the article looks at the historical development of bank holding company law and regulation, which laid the foundation for the current practice of umbrella supervision. The second part of the article provides answers to questions related to the Board’s current role as umbrella supervisor: What does “umbrella supervision” mean, and is it different from “consolidated supervision”? How does the GLB Act limit the Board’s authority and practice and when did the Board obtain all of the legal authority to allow it to practice umbrella supervision?