---
kind: "section"
citation: "12 U.S.C. § 1831w"
title: "12"
title_heading: "Banks and Banking"
number: "1831w"
heading: "Safety and soundness firewalls applicable to financial subsidiaries of banks"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/1831w"
units:
  - "Chapter 16 — Federal Deposit Insurance Corporation"
---

# §1831w. Safety and soundness firewalls applicable to financial subsidiaries of banks

- (a) **In general—** An insured [State bank](/usc/12/1813.md?p=a-2) may [control](/usc/12/1813.md?p=w-5) or hold an interest in a [subsidiary](/usc/12/1813.md?p=w-4) that engages in activities as principal that would only be permissible for a national [bank](/usc/12/1813.md?p=a-1) to conduct through a financial [subsidiary](/usc/12/1813.md?p=w-4) if—
  - (1) the [State bank](/usc/12/1813.md?p=a-2) and each [insured depository institution](/usc/12/1813.md?p=c-2) [affiliate](/usc/12/1813.md?p=w-6) of the [State bank](/usc/12/1813.md?p=a-2) are well capitalized (after the capital deduction required by [paragraph (2)](#a-2));
  - (2) the [State bank](/usc/12/1813.md?p=a-2) complies with the capital deduction and financial statement disclosure requirements in [section 24a(c) of this title](/usc/12/24a.md?p=c);
  - (3) the [State bank](/usc/12/1813.md?p=a-2) complies with the financial and operational safeguards required by [section 24a(d) of this title](/usc/12/24a.md?p=d); and
  - (4) the [State bank](/usc/12/1813.md?p=a-2) complies with the amendments to sections 23A and 23B of the Federal Reserve Act [[12 U.S.C. 371c](/usc/12/371c.md) and 371c–1] made by [section 121(b)](/usc/12/121.md) of the Gramm-Leach-Bliley Act.
- (b) **Preservation of existing subsidiaries—** Notwithstanding [subsection (a)](#a), an insured [State bank](/usc/12/1813.md?p=a-2) may retain [control](/usc/12/1813.md?p=w-5) of a [subsidiary](/usc/12/1813.md?p=w-4), or retain an interest in a [subsidiary](/usc/12/1813.md?p=w-4), that the [State bank](/usc/12/1813.md?p=a-2) lawfully controlled or acquired before November 12, 1999, and conduct through such [subsidiary](/usc/12/1813.md?p=w-4) any activities lawfully conducted in such [subsidiary](/usc/12/1813.md?p=w-4) as of such date.
- (c) **Definitions—** For purposes of this section, the following definitions shall apply:
  - (1) **Subsidiary—** The term “[subsidiary](/usc/12/1813.md?p=w-4)” means any [company](/usc/12/1813.md?p=w-7) that is a [subsidiary](/usc/12/1813.md?p=w-4) (as defined in [section 1813(w)(4) of this title](/usc/12/1813.md?p=w-4)) of 1 or more [insured banks](/usc/12/1813.md?p=h).
  - (2) **Financial subsidiary—** The term “financial [subsidiary](/usc/12/1813.md?p=w-4)” has the meaning given the term in [section 24a(g) of this title](/usc/12/24a.md?p=g).
- (d) **Preservation of authority—**
  - (1) **This chapter—** No provision of this section shall be construed as superseding the authority of the Federal [Deposit](/usc/12/1813.md?p=l) Insurance Corporation to review [subsidiary](/usc/12/1813.md?p=w-4) activities under [section 1831a of this title](/usc/12/1831a.md).
  - (2) **Federal Reserve Act—** No provision of this section shall be construed as affecting the applicability of the 20th undesignated paragraph of section 9 of the Federal Reserve Act [[12 U.S.C. 335](/usc/12/335.md)].

## Source credit

(Sept. 21, 1950, ch. 967, § 2[46], as added Pub. L. 106–102, title I, § 121(d)(1), Nov. 12, 1999, 113 Stat. 1380.)

## Notes

### Editorial Notes

### References in Text

Section 121(b) of the Gramm-Leach-Bliley Act, referred to in subsec. (a)(4), is section 121(b) of Pub. L. 106–102, title I, Nov. 12, 1999, 113 Stat. 1378, which amended section 371c of this title.

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective 120 days after Nov. 12, 1999, see section 161 of Pub. L. 106–102, set out as an Effective Date of 1999 Amendment note under section 24 of this title.