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Question 269

Which of the following transactions does NOT require prior approval of the Federal Reserve Board?

The formation of a bank holding company

The acquisition by a bank holding company of a subsidiary

The acquisition of 25 percent of voting stock of a bank by another bank, in good faith, in its fiduciary capacity with no power to vote

The acquisition of 25 percent of voting stock of a bank by another bank in its fiduciary capacity for the benefit of the acquiring bank's employees

Correct Answer: C

The transaction that does not require prior approval of the Federal Reserve Board is the acquisition of 25 percent of voting stock of a bank by another bank, in good faith, in its fiduciary capacity with no power to vote. In this case, since the bank acquiring the stock has no power to vote, prior approval is not necessary. Other transactions, such as forming a bank holding company, acquiring a subsidiary by a bank holding company, or acquiring voting stock in a fiduciary capacity for the benefit of employees, typically require prior approval.

Discussion

Cam22Option: C

This transaction does not require prior approval of the Federal Reserve Board. Generally, the acquisition of voting stock by another bank in its fiduciary capacity with no power to vote is exempt from requiring prior approval. Options A, B, and D typically require prior approval of the Federal Reserve Board: