US regulators drop plans to tighten rules on obscure bank holding companies

US banking regulators are no longer moving forward with a proposed rule that would have increased oversight of parent companies owning industrial banks. This means that these companies will not face new requirements to act as a financial holding company, which would have meant more regulatory scrutiny.

Industrial banks are a special type of bank that can be owned by non-financial companies, like Walmart or BMW. For years, these companies have been able to own banks without the same level of oversight as traditional bank holding companies. This decision means that loophole remains open, allowing more companies to operate banks without full federal scrutiny.