This isn't news in the technical sense. JPMorgan owned a 9% stake in The Tribune Company when it emerged from bankruptcy protection on Dec. 31. 2012, and some news reports even bothered to make mention of this fact at the time.
Still, chances are that if you told a regular follower of business news that JPMorgan is the second-largest owner of Tribune Co., you'd be met with surprise. Following Monday's announcement that the Tribune will pay $2.7 billion to buy 19 television stations, making it the nation's largest owner of commercial television stations, JPMorgan's stake becomes more significant. Oh, and of course JPMorgan is the main lender on the deal.
While this is nice for JPMorgan, it makes us wonder about those supposed laws separating banking and commerce.The bank holding company act in 1956, which was strengthened in 1970 said commercial companies can't own banks, explains Mehrsa Baradaran, University of Georgia law school professor who has written about the separation of banking and commerce. This law stymied efforts by Wal-Mart (WMT - Get Report) to get a banking charter in 2005, Baradaran says. Nonetheless, an exception was created in Utah 1987 allowing the creation of "industrial loan companies" (ILCs). This exception has allowed companies including American Express (AXP), Target (TGT), Volkswagen and General Electric (GS - Get Report), Goldman Sachs (GS - Get Report)and Morgan Stanley (MS - Get Report) to obtain banking charters. "First it was grandfathered in and then it became a loophole," Baradaran says. However, Wal-Mart's application in 2005 was met with fierce lobbying from the banking industry, causing the FDIC to create a moratorium on ILCs. The 2010 Dodd-Frank law reinstated that moratorium and, according to Baradaran "it
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