DEFINITION of 'Douglas Amendment'
An amendment made to the Bank Holding Act of 1956. The Douglas Amendment prevented banks from acquiring banks across different states. However, a bank could seek an exception to this rule by getting the authorization of the state of the bank that is to be acquired. This exception was rarely granted though, and was only authorized in limited circumstances.
BREAKING DOWN 'Douglas Amendment'
In 1994, the Riegle-Neal Banking Act was introduced that allowed banks to acquire other banks in different states, effectively repealing the Douglas Amendment. As a result of allowing interstate bank acquisition, the U.S. experienced a period of increased consolidation and increases in bank sizes in the industry.