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S 2663119th CongressIn Committee
Merchant Banking Modernization Act
Introduced: Aug 1, 2025
Sponsor: Sen. Rounds, Mike [R-SD] (R-South Dakota)
Financial Services
Standard Summary
Comprehensive overview in 1-2 paragraphs
Merchant Banking Modernization Act would amend the Bank Holding Company Act of 1956 to change how long bank holding companies can hold merchant banking investments (investments in nonbanking companies). The bill sets a minimum holding period of 15 years for merchant banking investments, and it applies to investments held on the date of enactment as well—the minimum 15-year period would start from the initial date of each such investment. In short, the bill shifts the norm toward much longer-term, nonbanking investments by bank holding companies, with the specifics to be set by regulators under “such regulations.” The sponsors for the bill include several senators who introduced it in the Senate.
Key Points
- 1The bill amends 4(k)(7)(A) of the Bank Holding Company Act to require a minimum 15-year holding period for merchant banking investments.
- 2For investments already held on the enactment date, the 15-year minimum runs from the initial date the investment was made.
- 3The phrase “under such regulations” means regulators (under the BHCA framework) would establish the details of how this 15-year period is implemented.
- 4The bill does not specify a maximum holding period; 15 years is a floor, with longer periods potentially allowed by regulation.
- 5The act is limited in scope to merchant banking activities and relies on regulatory rules for precise application.
Impact Areas
Primary: Bank holding companies and their investment portfolios (affecting how they allocate capital to nonbanking ventures and manage long-term risks).Secondary: Regulators and supervisory agencies responsible for enforcing the Bank Holding Company Act (in practice, this could affect oversight, capital planning, and risk management frameworks).Additional impacts: Nonbanking companies that attract merchant banking investments, employees and communities linked to those portfolio companies, and potential implications for liquidity, risk tolerance, and long-horizon investment strategies within the financial sector.
Generated by gpt-5-nano on Oct 8, 2025