(a) Authorized activities. A financial subsidiary of a state member
bank may engage in only the following activities:
(1) any financial activity listed in section
225.86(a), (b), or (c) of the Board’s Regulation Y (12 CFR 225.86(a),
(b), or (c));
(2) any
activity that the secretary of the Treasury, in consultation with
the Board, has determined to be financial in nature or incidental
to a financial activity and permissible for financial subsidiaries
pursuant to section 5136A(b) of the Revised Statutes of the United
States (12 USC 24a(b)); and
(3) any activity that the state member
bank is permitted to engage in directly (subject to the same terms
and conditions that govern the conduct of the activity by the state
member bank).
(b) Impermissible activities. Notwithstanding paragraph (a) of this
section, a financial subsidiary may not engage as principal in the
following activities:
(1) insuring, guaranteeing, or indemnifying
against loss, harm, damage, illness, disability, or death (except
to the extent permitted under applicable state law and section 302
or 303(c) of the Gramm-Leach-Bliley Act 15 USC 6712 or 6713(c));
(2) providing or issuing
annuities the income of which is subject to tax treatment under section 72
of the Internal Revenue Code (26 U.S.C. 72);
(3) real estate development or real estate
investment, unless otherwise expressly authorized by applicable state
and federal law; and
(4) any merchant banking or insurance company investment activity
permitted for financial holding companies by section 4(k)(4)(H) or
(I) of the Bank Holding Company Act (12 U.S.C. 1843(k)(4)(H) and (I)).
