The answers to these questions are important because the firewalls are far from costless. They impose operational inefficiencies on bank holding companies that increase their costs and reduce their competitiveness, and they limit a bank holding company’s ability to market its products in a way that is both most profitable and desired by its customers.
As such, the firewalls have served as a significant barrier to entry for small and mid-size bank holding companies because those companies cannot realize sufficient synergies or achieve adequate operating revenues to justify establishing a section 20 subsidiary. The loss is not just to these companies but also to their customers and market competition.