Trade Group Defends Threatened Thrift Charter

In a bid to save their industry, America's Community Bankers told members of the House Commerce Committee last week that eliminating the thrift charter would make it harder for securities and insurance firms to offer banking products.

"We hope that you ... decide it would be better to allow federal savings associations and unitary thrift holding companies to continue to operate side by side with commercial banks," ACB director of government relations Robert R. Davis said in a July 17 letter.

House Commerce is debating financial modernization legislation, approved June 20 by the House Banking Committee, that would eliminate the federal thrift charter and grandfather unitary thrift holding companies.

Mr. Davis also noted that unitary thrift holding companies already are subject to functional regulation.

"Nonbank affiliates, such as insurance and securities firms, are regulated by their appropriate regulator with no interference from any banking regulator," Mr. Davis said.

The thrift trade group also disputed a recent claim by the American Bankers Association that unitary thrift holding companies involve the "unrestricted mix of commerce and banking."

A thrift's commercial lending is capped at 20% of assets, and at least half of the amount must be channeled to small businesses, ACB argued.