What does the Control Definition under the Bank Holding Company Act of 1956 state about control?

The Control Definition under the Bank Holding Company Act of 1956 states that a person or entity is considered to exercise control over a bank if they directly or indirectly own 25% or more of any class of voting securities. This threshold is significant because it establishes a clear and quantifiable measure for determining control, which is essential for regulatory oversight. By recognizing ownership of 25% or more of voting securities as indicative of control, the Act aims to identify those who have sufficient influence over the bank's decisions and operations.

This control definition is critical in maintaining the safety and soundness of the banking system, as it ensures that significant shareholders are subject to regulatory scrutiny and adhere to banking laws and regulations aimed at promoting stability and fairness in financial markets.