WASHINGTON, Nov. 27 — A House-Senate Conference Committee has decided to place under a one-bank holding company bill all conglomerate corporations which own banks, in a move that probably will probably force most of them out of the banking business.
The committee rejected Tuesday a proposal which would have allowed conglomerates to continue owning a bank while expanding into other forms of business.
Under a compromise plan, a multi-product corporation owning a bank would be permitted to expand only in bank-related fields.
It is likely that most would shed their banks before accepting such a restriction. The conglomerates are expected to be allowed up to 10 years to sell their banks.
The House-Senate conference committee for the past week has been drafting the final version of a proposed law to control expansion of one-bank holding companies.
The decision to junk the exemption for conglomerates now owning banks was part of a package adopted tentatively late Tuesday. The conferees will resume negotiations Wednesday, Dec. 2.
The tentative agreement also includes a new definition of the kinds of operations to be permitted all bank holding companies, multi-bank and one-bank firms.
The delicately phrased, 150-word paragraph, released Tuesday by the committee, represents the most important Congressional action this session in the banking field.
The committee still has not decided the type of criteria to be used in exempting some conglomerates from the new law.
It is considering two standards — one based on the date the company acquired the bank, and the other on its asset size.
The committee of House members and Senators had been appointed to work out a compromise one-bank holding company regulatory bill.
It is working from two drafts — one approved by the House, which the holding companies consider highly restrictive, and a Senate-passed bill favored by the industry.
The conferees early in the negotiations dropped what the holding companies considered the most onerous provision of the House bill — a section containing a laundry list of restricted activities for banks.
The conferees also are likely to turn down another provision considered by the companies to be unrealistically harsh. This is a requirement that the firms divest all non-bank subsidiaries picked up in the last 4 years.
The tentative agreement adopted this week also includes a provision intended to prevent banks from forcing customers to purchase a bank service as a condition for getting a loan.
The conferees also went along with a Senate proposal to authorize the minting of 150 million silver dollars to bear the likeness of former President Eisenhower.
The bill also would accomplish the over-all objective of placing the Federal Reserve Board in charge of regulating the expansion of one-bank holding companies. At present only those companies with two or more banks are regulated by the Fed.
The proposal to excuse conglomerate-owned banks from Fed control was part of a section in the Senate bill which would have exempted 82% of the nation's one-bank holding companies.
The other firms affected are the smaller, traditional one-bank holding companies. Most were formed within the past 25 years. In most cases, banking is the dominant activity. A few of these banks also are owned by universities, single-product corporations, labor unions and other groups.
These probably will be allowed to keep their banks, although details still remain to be worked out by the House-Senate conference committee.
While all portions of the bill affect the banking industry, it was the new standard for bank holding company acquisitions which this week occupied the closest attention of bank lawyers and industry leaders.
