What Is a Non-Bank?

I’ve read the NYT and WSJ articles, and the prepared testimony by Bernanke and Geithner, and I have a very basic question. Bernanke and Geithner said they needed new power over “systemically important nonbank financial firms” or “large, interconnected, non-depository financial institutions” or, most simply, “non-banks.” This is to complement the FDIC’s existing power to take depository institutions (”banks”) into conservatorship.Are bank holding companies “non-banks,” which happen to have “banks” as subsidiaries? If so, the legislation they are asking for should make it easier to nationalize a large, complicated thing (I don’t know what to call it anymore, but you know what I mean) like Citigroup. Various people arguing against nationalization have said that while the government has the power to take over the depository institutions within Citigroup, it can’t take over the umbrella entity; this would eliminate that problem.

If so, I would call that a good thing. But I can’t find the answer.

Update: Thanks to the commenters. And to Yves Smith. So the Fed has regulatory authority over bank holding companies (that bit I already knew), but there is no defined process similar to what the FDIC does for taking over and winding down failing institutions.


Originally published at the Baseline Scenario and reproduced here with the author’s permission.