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McFadden Act of 1927

McFadden Act of 1927 (P.L. 69-639, 44 STAT. 1224)

Amended the national banking law and the Federal Reserve Act. Enacted to address some of the competitive inequalities between state and national banks. The McFadden Act was intended to promote equality between national and state banks by permitting national bank branching to the extent that branches could be established by state banks under state law. Prior to the McFadden Act, some states allowed branch banking for state chartered institutions resulting in national banks not being able to effectively compete.

Key points:
  • Provides a basic definition of the term “branch” for national banks.
  • Prohibited interstate branch banking.
  • The Riegle–Neal Interstate Banking and Branching Efficiency Act repealed the McFadden Act’s prohibition on interstate branching.
Why is it still relevant?
While Riegle-Neal governs interstate branching, the McFadden Act provides the basis for national banks to establish intrastate branches in the state in question to the extent state law permits branch establishment by state banks.

Last modified at 7/23/2010 10:48 AM  by Rosemarie Shaheen