WASHINGTON -- The Federal Reserve Board asserted its independence Wednesday by permitting Barnett Banks Inc. to acquire another company despite an ongoing fair-lending probe by the Department of Justice.
The Fed said in its decision that it reviewed "extensive" evidence about the fair-lending inquiry before granting Barnett's bid to assume Loan America Financial Corp. of Miami Lakes, Fla.
Fed Governor Lawrence Lindsey said the board looked at statistical analyses run at the Fed's request.
It also examined Community Reinvestment Act findings for 3 1 of Barnett's banks and found that 14 were rated "outstanding" and 17 "satisfactory."
Mr. Lindsey said the Fed delayed its decision for several weeks to give the Justice Department time to produce evidence.
But, he said, the department decided it could not disclose information from its inquiry.
Once the department refused to provide the information, the Fed had a "due process" obligation to act, Mr. Lindsey said.
"In a sense it was an easy decision," Mr. Lindsey stud. "We had nothing on the record to give us a reason to deny the application."
Barnett did not get away scot-free, however. The board stated that it plans to monitor the Justice Department's probe.
Banking advocates rejoiced at the decision, saying it shows that the Fed will no longer hold expansion plans hostage during Justice Department investigations.
"This is good because it will let-holding companies go forward," said Richard Whiting, general counsel to the Bankers Roundtable.
The ruling also represents a strong signal to the Justice Department that the Fed "is the regulator of banks," Mr. Whiting said.
At Hitshen, a former Justice Department attorney now with San Francisco's Pettit & Martin; said the decision is a blow to community groups.
"It means you can't use the Justice route as a leverage point the same way you could before," Mr. Hirshen said.
