Merchant Banking Modernization Act
Merchant Banking Modernization Act
Plain Language Summary
# Merchant Banking Modernization Act Summary **What the bill would do:** This bill would allow large financial holding companies (like major banks) to hold investments in non-financial businesses for up to 15 years, instead of the current 10-year limit. When banks provide financial services to private companies, they sometimes receive ownership stakes in those companies as part of the deal. Currently, the Federal Reserve can review and potentially limit how long banks keep these investments; this bill would extend the minimum holding period to 15 years. **Who it affects:** Primarily large financial holding companies and the private businesses they invest in.
The change would give banks more flexibility in managing their investment portfolios and could potentially affect the types of deals banks are willing to finance. **Current status:** The bill is in committee as of the 119th Congress (2025-2026), meaning it has been introduced but not yet voted on by the full House. It was sponsored by Representative Roger Williams, a Texas Republican.
CRS Official Summary
Merchant Banking Modernization ActThis bill requires financial holding companies to be allowed to hold merchant banking investments for a minimum of 15 years.Currently, financial holding companies are generally prohibited from holding interests in nonfinancial companies, however, there are statutory exemptions for merchant banking activities—financial services for private commercial entities. As a result of these financial services, the financial holding company may gain equity in these private commercial entities through portfolio holdings. Under current regulations, these holdings are subject to certain limitations, including a holding limit of 10 years, with the option of extending the period subject to review by the Federal Reserve Board.
Latest Action
Placed on the Union Calendar, Calendar No. 320.