Banking Practice Exam

The Bank Holding Company Act is the correct answer because it specifically regulates the activities of bank holding companies, which are entities that own or control one or more banks. This act was established to ensure that these companies primarily engage in banking or closely related activities, thus limiting their ability to expand into non-banking sectors. This regulation was introduced to maintain the financial stability of the banking industry and to prevent excessive concentration of economic power.

The other acts mentioned do serve important roles within the banking framework but do not focus specifically on limiting the activities of a company based on its ownership of a bank in the same way. The Federal Reserve Act primarily established the Federal Reserve System and doesn’t concern itself with the ownership structure of banks. The McFadden Act mainly addressed branch banking and interstate banking regulations, and the Glass-Steagall Act historically separated commercial banking from investment banking but has since been repealed, making it less relevant to the current structure of bank holding companies.