BMW opened a bank via a charter the law's own definition missed

The Bank Holding Company Act of 1956 was written to keep banking and commerce separate: a company that owns a 'bank' as the Act defines it becomes a regulated bank holding company, subject to Federal Reserve oversight and barred from most non-financial business lines. For a carmaker that wanted to offer its own dealers and customers financing, checking accounts, and credit cards directly, that meant owning a deposit-taking institution was legally closed off -- unless the institution it wanted to own did not count as a 'bank' under the Act's own words.

It did not, by accident of drafting. In 1987 Congress passed the Competitive Equality Banking Act to close a different loophole (the 'nonbank bank' workaround), and in doing so it redefined 'bank' to sweep in most FDIC-insured deposit institutions -- but grandfathered a short list of older charter types, including the industrial loan company (ILC), that had existed since early in the century as small local lenders to industrial workers and had never been the target the drafters had in mind. Utah, which chartered ILCs, lifted its own moratorium on new charters in 1997 and began actively marketi