JUSTICE STEVENS delivered the opinion of the Court.
In 1956 Congress enacted the Bank Holding Company Act to control the future expansion of bank holding companies and to require divestment of their nonbanking interests.
The Board's determination, which was implemented by an amendment to its "Regulation Y," permits bank holding companies and their nonbanking subsidiaries to act as an investment adviser as that term is defined by the Investment Company Act of 1940.
The Board issued an interpretive ruling in connection with its amendment to Regulation Y. That ruling distinguished "open-end" investment companies (commonly referred to as "mutual funds") from "closed-end" investment companies. The ruling explained that "a mutual fund is an investment company, which, typically, is continuously engaged in the issuance of its shares and stands ready at any time to redeem the securities as to which it is the issuer; a closed-end investment company typically does not issue shares after its initial organization except at infrequent intervals and does not stand ready to redeem its shares."
The Court of Appeals rejected respondent's argument that Regulation Y, as amended, violated the Glass-Steagall Act, relying on the fact that the prohibitions of §§ 16 and 21 of
We granted certiorari because of the importance of the Court of Appeals holding. 444 U.S. 1070. We are persuaded
The services of an investment adviser are not significantly different from the traditional fiduciary functions of banks. The principal activity of an investment adviser is to manage the investment portfolio of its advise—to invest and reinvest the funds of the client. Banks have engaged in that sort of activity for decades.
The Board's determination of what activities are "closely related" to banking is entitled to the greatest deference.
Respondent's principal attack on the Board's general determination that investment adviser services are so closely related as to be a proper incident to banking proceeds from the premise that if such services were performed by a bank, the bank would violate §§ 16 and 21 of the Glass-Steagall Act.
Sections 16 and 21 of the Glass-Steagall Act approach the legislative goal of separating the securities business from the banking business from different directions. The former places a limit on the power of a bank to engage in securities transactions; the latter prohibits a securities firm from engaging in the banking business. Section 16 expressly prohibits a bank from "underwriting" any issue of a security or purchasing any security for its own account. The Board's interpretive ruling here expressly prohibits a bank holding company or its subsidiaries from participating in the "sale or distribution" of securities of any investment company for which it acts as investment adviser. 12 CFR § 225.125 (h) (1980). The ruling also prohibits bank holding companies and their subsidiaries from purchasing securities of the investment company for which it acts as investment adviser. § 225.125 (g).
We are also satisfied that a bank's performance of such services would not necessarily violate § 21. In contrast to § 16, § 21 prohibits certain kinds of securities firms from engaging in banking. The § 21 prohibition applies to any organization "engaged in the business of issuing, underwriting, selling, or distributing" securities. Such a securities firm may not engage at the same time "to any extent whatever in
Even if we were to assume that a bank would violate the Glass-Steagall Act by engaging in certain investment advisory
In all events, because all that is presently at issue is the Board's preliminary authorization of such services, rather than approval of any specific advisory relationship, speculation about possible conflicts with the Glass-Steagall Act is plainly not a sufficient basis for totally rejecting the Board's carefully considered determination.
Our conclusions with respect to the Glass-Steagall Act are in no way altered by consideration of our decision in Investment
In Camp the Court relied squarely on the literal language of §§ 16 and 21 of the Glass-Steagall Act. After noting that § 16 prohibited the underwriting by a national bank of any issue of securities and the purchase for its own account of shares of stock of any corporation, and that § 21 prohibited corporations from both receiving deposits and engaging in issuing, underwriting, selling, or distributing securities, the Court recognized that the statutory language plainly applied to a bank's sale of redeemable and transferable "units of participation" in a common investment fund operated by the bank. 401 U. S., at 634. Because the Court held that the bank was the underwriter of the fund's units of participation within the meaning of the Investment Company Act of 1940,
This case presents an entirely different issue. No one could dispute the fact that the shares in a closed-end investment company are securities. But as we have indicated, such securities are not issued, sold, or underwritten by the investment adviser. In contrast to the bank's activities in issuing, underwriting, selling, and redeeming the units of participation in the Camp case, in this case the Board's interpretive ruling expressly prohibits such activity.
The Court in Camp recognized that in enacting the Glass-Steagall Act, Congress contemplated other hazards in addition to the danger of banks using bank assets in imprudent securities investments.
The Court of Appeals rested its conclusion that the Board had exceeded its statutory authority on a review of the legislative history of § 4 (c) (8). As originally enacted in 1956 the section referred to activities "closely related to the business of banking." In 1970, when the Act was amended to
Congress did intend the Bank Holding Company Act to maintain and even to strengthen Glass-Steagall's restrictions on the relationship between commercial and investment banking. Part of the motivation underlying the requirement that bank holding companies divest themselves of nonbanking interests was the desire to provide a measure of regulation missing from the Glass-Steagall Act.
To invalidate the Board's regulation, the Court of Appeals had to assume that the activity of managing investments for a customer had been regarded by Congress as an aspect of investment banking rather than an aspect of commercial banking. But the Congress that enacted the Glass-Steagall Act did not take such an expansive view of investment banking.
The legislative history of the 1970 Amendments indicates that Congress did not intend the 1970 Amendments to have any effect on the prohibitions of the Glass-Steagall Act. The Senate chairman of the Conference Committee assured his fellow Senators that the conference bill was intended neither to enlarge nor to restrict the prohibitions contained
Because we have concluded that the Board's decision to permit bank holding companies to act as investment advisers for closed-end investment companies is consistent with the language of the Bank Holding Company Act, and because such services are not prohibited by the Glass-Steagall Act, we hold that the amendment to Regulation Y does not exceed the Board's statutory authority. The judgment of the Court of Appeals is
JUSTICE STEWART and JUSTICE REHNQUIST took no part in the consideration or decision of this case. JUSTICE POWELL took no part in the decision of this case.
"(a) Except as otherwise provided in this Act, no bank holding company shall—
"(1) after the date of enactment of this Act acquire direct or indirect ownership or control of any voting shares of any company which is not a bank. . . .
"(c) The prohibitions in this section shall not apply—
"(6) to shares of any company all the activities of which are of a financial, fiduciary, or insurance nature and which the Board after due notice and hearing, and on the basis of the record made at such hearing, by order has determined to be so closely related to the business of banking or of managing or controlling banks as to be a proper incident thereto and as to make it unnecessary for the prohibitions of this section to apply in order to carry out the purposes of this act . . . ." 70 Stat. 135-137.
The relevant exemption is now found in § 4 (c) (8) which allows holding company ownership of:
"(8) shares of any company the activities of which the Board after due notice and opportunity for hearing has determined (by order or regulation) to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In determining whether a particular activity is a proper incident to banking or managing or controlling banks the Board shall consider whether its performance by an affiliate of a holding company can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. In orders and regulations under this subsection, the Board may differentiate between activities commenced de novo and activities commenced by the acquisition, in whole or in part, of a going concern." 12 U. S. C. § 1843 (c) (8).
"(ii) serving as investment adviser, as defined in section 2 (a) (20) of the Investment Company Act of 1940, to an investment company registered under that Act."
"(20) `Investment adviser' of an investment company means (A) any person (other than a bona fide officer, director, trustee, member of an advisory board, or employee of such company, as such) who pursuant to contract with such company regularly furnishes advice to such company with respect to the desirability of investing in, purchasing or selling securities or other property, or is empowered to determine what securities or other property shall be purchased or sold by such company, and (B) any other person who pursuant to contract with a person described in clause (A) of this paragraph regularly performs substantially all of the duties undertaken by such person described in said clause (A); but does not include (i) a person whose advice is furnished solely through uniform publications distributed to subscribers thereto, (ii) a person who furnishes only statistical and other factual information, advice regarding economic factors and trends, or advice as to occasional transactions in specific securities, but without generally furnishing advice or making recommendations regarding the purchase or sale of securities, (iii) a company furnishing such services at cost to one or more investment companies, insurance companies, or other financial institutions, (iv) any person the character and amount of whose compensation for such services must be approved by a court, or (v) such other persons as the Commission may by rules and regulations or order determine not to be within the intent of this definition." 15 U. S. C. § 80a-2 (20).
"Since there will always be some shareholders who want to sell, an open-end company must comply with continuous demands for cash from selling stockholders. To offset the resulting cash outflow and because of the strong incentives for growth created by the structure of the industry, the managers of virtually all open-end companies vigorously promote sales of new shares at all times." H. R. Rep. No. 2337, supra, at 42-43.
"In no case, however, should a bank holding company act as investment adviser to an investment company which has a name that is similar to, or a variation of, the name of the holding company or any of its subsidiary banks.
"(g) In view of the potential conflicts of interests that may exist, a bank holding company and its bank and nonbank subsidiaries should not (1) purchase for their own account securities of any investment company for which the bank holding company acts as investment adviser; (2) purchase in their sole discretion, any such securities in a fiduciary capacity (including as managing agent); (3) extend credit to any such investment company; or (4) accept the securities of any such investment company as collateral for a loan which is for the purpose of purchasing securities of the investment company.
"(h) A bank holding company should not engage, directly or indirectly, in the sale or distribution of securities of any investment company for which it acts as investment adviser. Prospectuses or sales literature should not be distributed by the holding company, nor should any literature be made available to the public at any offices of the holding company. In addition, officers and employees of bank subsidiaries should be instructed not to express any opinion with respect to advisability of purchase of securities of any investment company for which the bank holding company acts as investment adviser. Customers of banks in a bank holding company system who request information on an unsolicited basis regarding any investment company for which the bank holding company acts as investment adviser may be furnished the name and address of the fund and its underwriter or distributing company, but the names of bank customers should not be furnished by the bank holding company to the fund or its distributor. Further, a bank holding company should not act as investment adviser to a mutual fund which has offices in any building which is likely to be identified in the public's mind with the bank holding company." 12 CFR §§ 225.125 (f), (g), (h) (1980).
"The business of dealing in investment securities by [a national bank] shall be limited to purchasing and selling such securities without recourse, solely upon the order, and for the account of, customers, and in no case for its own account, and [a national bank] shall not underwrite any issue of securities: Provided, That [a national bank] may purchase for its own account investment securities under such limitations and restrictions as the Comptroller of the Currency may by regulation prescribe . . . ." 48 Stat. 184.
Section 16, as amended, is now codified at 12 U. S. C. § 24 (Seventh).
Section 21, provides, in pertinent part, that it is unlawful
"[f]or any person, firm, corporation, association, business trust, or other similar organization, engaged in the business of issuing, underwriting, selling, or distributing, at wholesale or retail, or through syndicate participation, stocks, bonds, debentures, notes, or other securities, to engage at the same time to any extent whatever in the business of receiving deposits subject to check or to repayment upon presentation of a passbook, certificate of deposit, or other evidence of debt, or upon request of the depositor. . . ." 48 Stat. 189, 12 U. S. C. § 378.
"National banks were granted trust powers in 1913. Federal Reserve Act, § 11, 38 Stat. 261. The first common trust fund was organized in 1927, and such funds were expressly authorized by the Federal Reserve Board by Regulation F promulgated in 1937. Report on Commingled or Common Trust Funds Administered by Banks and Trust Companies, H. R. Doc. No. 476, 76th Cong., 2d Sess., 4-5 (1939). For at least a generation, therefore, there has been no reason to doubt that a national bank can, consistently with the banking laws, commingle trust funds on the one hand, and act as a managing agent on the other. No provision of the banking law suggests that it is improper for a national bank to pool trust assets, or to act as a managing agent for individual customers, or to purchase stock for the account of its customers." Id., at 624-625.
See also Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 307-308 (1950).
"Not only because Congress has committed the system's operation to their hands, but also because the system itself is a highly specialized and technical one, requiring expert and coordinated management in all its phase, I think their judgment should be conclusive upon any matter which, like this one, is open to reasonable difference of opinion. Their specialized experience gives them an advantage judges cannot possibly have, not only in dealing with the problems raised for their discretion by the system's working, but also in ascertaining the meaning Congress had in mind in prescribing the standards by which they should administer it. Accordingly their judgment in such matters should be overturned only where there is no reasonable basis to sustain it or where they exercise it in a manner which clearly exceeds their statutory authority." Id., at 450.
See also Board of Governors v. First Lincolnwood Corp., 439 U.S. 234, 248 (1978).
"[T]here are many other activities of a financial, fiduciary, or insurance nature which cannot be determined to be closely related to banking without a careful examination of the particular type of business carried on under such activity. For this reason your committee deems it advisable to provide a forum before an appropriate Federal authority in which decisions concerning the relationship of such activities to banking can be determined in each case on its merits." S. Rep. No. 1095, 84th Cong., 1st Sess., pt. 1, p. 13 (1955) (hereinafter 1955 Senate Report).
The legislative history of the Bank Holding Company Act Amendments of 1970 indicated that the Amendments were not intended to cut back on the discretion afforded the Board. As Senator Bennett, a member of the Conference Committee, indicated, the 1970 Amendments maintained "maximum flexibility for the Federal Reserve Board to determine the activities in which a bank holding company and its subsidiaries may engage . . . ." 116 Cong. Rec. 42432 (1970). See n. 58, infra.
"Mr. GLASS. . . . Here [§21] we prohibit the large private banks, whose chief business is investment business, from receiving deposits. We separate them from the deposit banking business.
"Mr. ROBINSON of Arkansas. That means if they wish to receive deposits they must have separate institutions for that purpose?
"Mr. GLASS. Yes." 77 Cong. Rec. 3730 (1933).
Section 16, which prohibits a national bank from "underwriting" any issue of a security, by its terms applies only to banks. Although respondent contended here and in the Court of Appeals that the bank and its holding company should be treated as a single entity for purposes of applying §§ 16 and 21, the structure of the Glass-Steagall Act indicates to the contrary. Sections 16 and 21 flatly prohibit banks from engaging in the underwriting business. Organizations affiliated with banks, however, are dealt with by other sections of the Act. Section 19 (e), 48 Stat. 188, repealed in pertinent part, 80 Stat. 242, prohibited bank holding companies from voting the shares of a bank subsidiary unless the holding company divested itself of any interest in a subsidiary formed for the purpose of or "engaged principally" in the issuance or underwriting of securities. More importantly, § 20 of the Act, 48 Stat. 188, prohibits national banks or state bank members of the Federal Reserve System from owning securities affiliates, defined in § 2 (b), 48 Stat. 162, that are "engaged principally" in the issuance or underwriting of securities. Thus the structure of the Act reveals a congressional intent to treat banks separately from their affiliates. The reading of the Act urged by respondent would render § 20 meaningless.
"[T]he Board's regulation was adopted pursuant to section 4 (c) (8) of the Bank Holding Company Act and authorizes investment advisory activity to be conducted by a nonbanking subsidiary of the holding company. The authority of national banks or state member banks to furnish investment advisory services does not derive from the Board's regulation; such authority would exist independently of the Board's regulation and its scope is to be determined by a particular bank's primary supervisory agency." App. to Pet. for Cert 61a.
Thus the regulation applies only to bank holding companies. Although the interpretive ruling applies to banks, that ruling contains only restrictions on the activity permitted by the regulation. The Board's opinion explained that the restrictions contained in the interpretive ruling were intended to apply to banks when the investment advisory function was performed by a holding company or its nonbanking subsidiaries. Ibid. This imposition of restrictions on banks prevented bank holding companies and their nonbanking subsidiaries from evading the restrictions by allowing subsidiary banks to perform the restricted activities. Whether banks are mistakenly relying on the Board's interpretive ruling to derive permission to act as investment advisers is not relevant to the determination of the Board's power to enact the challenged regulation. We do note that at the time of the Court of Appeals decision, the Board represented that no bank had sought the Board's approval for an investment adviser service that is a prerequisite to acting pursuant to Board authority. See 196 U. S. App. D. C., at 107, n. 26, 606 F. 2d, at 1014, n. 26. Thus although in the discussion to follow we refer to bank affiliation with investment companies, this reference is only for purposes of addressing respondent's argument that banks would violate the Glass-Steagall Act by serving as investment advisers to closed-end investment companies.
"[N]o [national bank] shall be affiliated . . . with any corporation, association, business trust or other similar organization engaged principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation of stocks, bonds, debentures, notes or other securities." 48 Stat. 188, 12 U. S. C. § 377.
Although "affiliate" as originally defined in § 2(b) of the Glass-Steagall Act did not include holding companies, see 48 Stat. 162, Congress in 1966 amended the statute to bring holding companies within the definition of "affiliate" and thereby within the reach of § 20. 80 Stat. 242, 12 U. S. C. § 221a (b) (4). In Board of Governors v. Agnew, 329 U.S. 441 (1947), the Court recognized the difference in the extent of prohibition of securities-related activities reflected in the use of the word "engaged" in § 21 as opposed to the use of the words "engaged principally" in § 20. Thus a less stringent standard should apply to determine whether a holding company has violated § 20 than is applied to a determination of whether a bank has violated §§ 16 and 21. Nevertheless, the Board's regulation goes beyond the less stringent standard by prohibiting any involvement by the bank holding company or its subsidiaries in the underwriting or selling of the securities of the investment company. Moreover, the distinction here between closed-end and open-end investment companies is crucial. If, as respondent contends, the closed-end company's initial issuance of stock were sufficient to render the company "principally engaged" in the issuance of securities, then all corporations, including banks, would at some point be engaged principally in the issuance of securities. We cannot accept this premise. Moreover, given our rejection of this premise, it follows that the investment adviser to such a company is clearly not engaged principally in the issuance of securities. To a certain extent, our conclusions infra with respect to §§ 16 and 21 subsume the argument that the regulation is inconsistent with § 20.
"[T]he purpose of this legislation is to protect the people of the United States in the right to have banks in which their deposits will be safe. They have a right to expect of Congress the establishment and maintenance of a system of banks in the United States where citizens may place their hard earnings with reasonable expectation of being able to get them out again upon demand." 77 Cong. Rec. 3837 (1933).
This purpose is also reflected by the fact that a major portion of the Act, around which most of the debate by both Houses centered, was the creation of the Federal Deposit Insurance Corporation. See 48 Stat. 168-180.
"Under the plan the bank customer tenders between $10,000 and $500,000 to the bank, together with an authorization making the bank the customer's managing agent. The customer's investment is added to the fund, and a written evidence of participation is issued which expresses in `units of participation' the customer's proportionate interest in fund assets. Units of participation are freely redeemable, and transferable to anyone who has executed a managing agency agreement with the bank. The fund is registered as an investment company under the Investment Company Act of 1940. The bank is the underwriter of the fund's units of participation within the meaning of that Act." 401 U. S., at 622-623.
"The difficulty here is that the Comptroller adopted no expressly articulated position at the administrative level as to the meaning and impact of the provisions of §§ 16 and 21 as they affect bank investment funds." 401 U. S., at 627.
"Every such holding company affiliate shall, in its application for such voting permit, (1) show that it does not own, control, or have any interest in, and is not participating in the management or direction of, any corporation, business trust, association, or other similar organization formed for the purpose of, or engaged principally in, the issue, flotation, underwriting, public sale, or distribution, at wholesale or retail or through syndicate participation, of stocks, bonds, debentures, notes, or other securities of any sort (hereinafter referred to as `securities company'); (2) agree that during the period that the permit remains in force it will not acquire any ownership, control, or interest in any such securities company or participation in the management or direction thereof; (3) agree that if, at the time of filing the application for such permit, it owns, controls, or has an interest, in, or is participating in the management or direction of, any such securities company, it will, within five years after the filing of such application, divest itself of its ownership, control, and interest in such securities company and will cease participating in the management or direction thereof, and will not thereafter, during the period that the permit remains in force, acquire any further ownership, control, or interest in any such securities company or participate in the management or direction thereof . . . ." 48 Stat. 188.
The "engaged principally" standard is the same standard as is contained in § 20 of the Glass-Steagall Act. Section 19 (e) also required bank holding companies to divest themselves of shares of companies "formed for the purpose of" the issuance or underwriting of securities. We do not view this language as prohibiting securities-related activities that would not also be prohibited by the "engaged principally" standard. All companies formed for the purpose of issuing or underwriting securities would surely meet the "engaged principally" test.
"Whenever a holding company thus controls both banks and nonbanking businesses, it is apparent that the holding company's nonbanking businesses may thereby occupy a preferred position over that of their competitors in obtaining bank credit. It is also apparent that in critical times the holding company which operates nonbanking businesses may be subjected to strong temptation to cause the banks which it controls to make loans to its nonbanking affiliates even though such loans may not at that time be entirely justified in the light of current banking standards. In either situation the public interest becomes directly involved." 1955 House Report, at 16.
The Court of Appeals also cited legislative history indicating that the Board was to have a "limited" authority to administer the § 4 (c) (8) exception. See Control and Regulation of Bank Holding Companies: Hearings on H. R. 2674 before the House Committee on Banking and Currency, 84th Cong., 1st Sess., 14 (1955); Control of Bank Holding Companies: Hearings on S. 880, S. 2350, and H. R. 6277 before a Subcommittee of the Senate Committee on Banking and Currency, 84th Cong., 1st Sess., 76 (1955). The fact that the scope of the Board's discretion was to be limited sheds no light on the question of Congress' view of the Glass-Steagall Act. Moreover, although the Court of Appeals relied, as indicative of congressional intent regarding the scope of § 4 (c) (8), on the Senate Report's omission of any securities-related activities from the listing of activities clearly falling within the § 4 (c) (8) exception, 196 U. S. App. D. C., at 110, 606 F. 2d, at 1017, the Senate Report, after listing those obviously related activities, goes on to indicate the importance of the Board's role in approving other such activities. See 1955 Senate Report, at 13; n. 23, supra. Finally, the Court of Appeals found significance in the repeal of § 19 (e) of Glass-Steagall in 1966 and the Senate Report's indication that § 19 (e) "serve[d] no substantial purpose" after passage of the 1956 Act. 1966 Senate Report, at 12. At the same time as Congress repealed § 19 (e), however, it amended the definition of "affiliate" in § 2 (b) of the Glass-Steagall Act to include bank holding companies, so that the restrictions applying to affiliates contained in § 20 of the Act then applied to bank holding companies as well. 80 Stat. 242. Furthermore, the fact that § 19 (e) served no purpose after the passage of the 1956 Act merely indicates that Congress was successful in its attempt to close the loophole left by Congress in the Glass-Steagall Act. It does not indicate that the 1956 Congress sought to impose more substantial restrictions than those contained in § 19 (e) or that the 1956 Congress misperceived the scope of those restrictions.
"Mr. WILLIAMS of New Jersey. I have one question I should like to ask the chairman of the committee.
"Both the Senate and House bills contained, in section 4 (c) (8), substantially similar language reiterating the existing law embodied in the Glass-Steagall Act which provides, essentially, for separation of commercial banking and the securities business. This language does not appear in the bill agreed to by the conferees. I wonder whether there was any intention to imply that the very securities-related activities forbidden to banks directly may nevertheless be engaged in by bank-holding companies or their nonbanking affiliates.
"Mr. SPARKMAN. The answer to the Senator's question is that there clearly was not. As it now stands, the Glass-Steagall Act broadly prohibits both banks and their affiliates from engaging in what we commonly understand to be the securities business. There are some specific exceptions, of course, but I can assure you that we did not mean to enlarge or contract them here. We regarded that general prohibition as being so clearly applicable to the subjects of this bill as to make a restatement of it unnecessary. The provision to which you referred is already complicated enough. In short, we did not intend to amend or modify, directly or indirectly, any limitations on the activities of banks, bank holding companies or any of their affiliates, now contained in the Glass-Steagall Act. If Congress is to change that longstanding, fundamental statement of public policy, we will have to do so in other legislation. I hope there is no longer any misconception on that point.
"Mr. WILLIAMS of New Jersey. It is reassuring, indeed, to know that the Glass-Steagall Act has not been disturbed in any way and that there is no intention at all here to do so." Id., at 42430.
See also 1970 Senate Report, at 15. By the time Congress was considering the 1970 Amendments, the definition of "affiliate" contained in § 2 (b) of the Glass-Steagall Act had been amended to include bank holding companies, so that the prohibitions contained in § 20 of Glass-Steagall had become applicable to bank holding companies.
"The inclusion of this provision is not intended to prejudice the rights of banks or bank holding companies or their affiliates to engage in such of these activities as may be permitted under existing law or which may become permissible under this legislation or under any future legislation. In particular, the language is not intended to inhibit the underwriting of revenue bonds nor operating commingled or managing agency accounts (bank sponsored mutual funds) which activities have already been specifically approved in legislation previously reported by this committee and passed by the Senate, if such legislation is finally enacted, if these activities are allowed under the amendments being made by this legislation, or if the activities are permitted by the courts." Ibid.
When the 1970 Amendments were passed, the status of bank-sponsored mutual funds under the Glass-Steagall Act was unsettled. The District of Columbia Circuit's decision in National Association of Securities Dealers v. SEC, 136 U. S. App. D. C. 241, 420 F.2d 83 (1969), approving bank operation of mutual funds, had not yet been reversed by our decision in Investment Company Institute v. Camp, 401 U.S. 617 (1971).
We also disagree with the Court of Appeals' conclusion that the policies underlying the 1970 Amendments would be frustrated by permitting bank holding companies to act as investment advisers to closed-end investment companies. See 196 U. S. App. D. C., at 116, 606 F. 2d, at 1023. The first policy, the fear that bank holding companies would improperly further the interests of the nonbanking subsidiary, is adequately protected by the Board's interpretive ruling. See nn. 38-44, supra, and accompanying text. Furthermore, given our conclusion that the 1970 Amendments at the very least did not cut back on the discretion granted the Board under the 1956 Act, we believe that to the extent that Congress addressed in the 1970 Amendments the second policy, the prevention of centralization of economic power, it did so by eliminating the one bank holding company loop-hole and not by limiting Board discretion to determine what activities are closely related to banking. 1970 Senate Report at 2-4; 1969 House Report, at 2.