Opposition from legislatures nationwide has delayed a plan to help state-chartered banks branch across state lines.
The proposal, drafted by Rep. Marge Roukema, R-N.J., would let state- chartered banks exercise all powers granted by their home-state regulators even at branches in other states.
Though she had hoped the bill could pass the House before Easter, Rep. Roukema decided to slow down after the National Conference of State Legislatures argued the plan would force state lawmakers into duels to enhance their bank charters.
Representing NCSL, Alabama State Rep. Al Knight called Rep. Roukema's bill a "congressional preemption of state sovereignty." In March 11 letters to House Banking Committee members, he said states would scramble to keep competitive with the national charter and the dual banking system would essentially come under federal control.
States should have the right to specify the powers of all state- chartered banks operating within their borders, he argued.
By lining up against the plan, state legislators are now pitted against state bank commissioners; the Roukema bill is strongly supported by the Conference of State Bank Supervisors. The state regulators are arguing that state banks will increasingly switch to federal charters to avoid the hassle of conflicting state laws after the Riegle-Neal interstate branching law takes full effect in June.
Rep. Knight suggested that interstate branching's effective date be delayed to June 1, 1998, to give legislatures time to decide whether they want to boost their charters to compete with those of national banks.
Citicorp lobbyists argue that banks have another reason to sit tight on financial reform: the thrift charter.
Charles W. Turnbaugh, Citicorp's director of U.S. legislative affairs, argued the thrift charter is ideal for institutions focusing on retail operations and should be the model for a new national bank charter.
The New York banking company owns Citibank FSB, a $14 billion-asset thrift with 204 branches in six states. Though Citi wants the added securities powers offered by financial modernization, banks should hold out for a better charter, according to Mr. Turnbaugh.
"Citicorp looks at its savings bank charter as the consumer bank charter of the 21st century," he said. In a memo circulated to several national banks, Mr. Turnbaugh said federal law gives thrifts important advantages, including:
Preemption of state rules on consumer disclosures, fees, licensing, and registration requirements.
Less restrictive interstate branching, even after Riegle-Neal takes full effect in June. For instance, 29 states that have "opted-in" to the law require that out-of-state banks enter their territory via an acquisition rather than by starting branches from scratch. Thrifts face no such restriction.
Authority to open mortgage lending and other subsidiaries without state approval.
Pressing the case for strict limits on banks' ability to merge with nonfinancial firms, Rep. Jim Leach addresses a group of big-bank lobbyists today ... To give employees a feel for where their political action committee funds go, Banc One Corp. chairman John B. McCoy treated five of the company's top fund-raisers to a March 6 trip to Washington. On the agenda was a tour of the White House and briefings from Senate Banking Committee Chairman Alfonse M. D'Amato, House Budget Committee Chairman John Kasich, and American Bankers Association executive vice president Donald G. Ogilvie.
