Trade Group Adopts Fla. Plan To Simplify State Bank Exams

Trying to keep state banks from switching charters, Florida regulators have served up a plan they think will simplify exams for banks that branch across state lines.

However, state-chartered banks will still have to deal with regulators from multiple jurisdictions in the Florida plan, which was adopted this month by the Conference of State Bank Supervisors.

The guidelines, in the works since last summer, are a response to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, which permits branching across boundaries as of June 1, 1997 - although some states have chosen to opt in earlier.

The ultimate goal of the plan, observers say, is to prevent state banks from switching to national charters. Banks making the shift would only answer to one regulator, the Office of the Comptroller of the Currency.

Regulators applauded the move, but some observers said more work is needed to put the state bank exams on even terms with the national banks.

Robert Rowe, regulatory counsel at the Independent Bankers Association of America, said the guidelines were "a good start" toward reducing the examination burden on state banks.

"They've made a good effort," Mr. Rowe said. "They've done a nice job of trying to foster the cooperation between states that's needed to make this work."

The plan, which regulators are not obligated to adopt, deems the state where a bank is headquartered to be the primary regulator of all branches, regardless of their location.

The home state's law will govern the bank's corporate structure and policies. The home state also will conduct all enforcement actions, except in emergency cases, in which a host-state agency may act.

But the Conference of State Bank Supervisors also reserved a role for the host state. Each branch is subject to the fair-lending, community reinvestment, and other consumer protection laws of the state in which it is situated. Host-state regulators also will provide the home-state supervisors with interpretations of state law.

Earl L. Manning, Missouri's commissioner of finance, said the plan should show banks "the viability of the state charter." Federal Reserve Board Governor Susan M. Phillips, a speaker at the conference, called the plan "an important step toward improving coordination in the supervision of state-chartered banks and reducing the regulatory burden on them."

Several states have already crafted their own agreements.

State commissioners in Delaware, Maryland, Pennsylvania, and Virginia signed a version of the group's plan in December, and others have followed suit. Kansas and Missouri have a similar agreement, as do the regulators in 10 western states.

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