Federal Reserve Expands Section 20 Powers to Include Corporate Debt Securities

The Federal Reserve Board dramatically expands Section 20 subsidiary powers, approving underwriting of corporate debt securities and increasing the revenue limit from bank-ineligible activities from 5% to 10%. This decision allows JP Morgan to become the first commercial bank to underwrite a corporate debt offering, effectively reuniting the commercial and investment banking arms of the original House of Morgan that Glass-Steagall had separated. The expansion represents a systematic approach to dismantling Glass-Steagall through administrative interpretation rather than legislative repeal, with the Federal Reserve progressively weakening the Act’s restrictions throughout the late 1980s and 1990s.