WASHINGTON -- In a broad plan to cut .regulatory burdens, the Comptroller's office said MOnday it may allow a bank's subsidiaries to offer products and services prohibited for the parent.
The proposed change, if adopted, could pave the way for national banks to underwrite securities through a subsidiary rather than through a holding company unit.
"The ability for operating subsidiaries to engage in activities that the bank cannot engage in would provide much more flexibility and opportunity to experiment," said Richard M. Whiting, general counsel at the Bankers Roundtable. "This would allow national banks to respond to changes in the technological and competitive environment with a little bit. more alacrity."
The public has 60 days to comment on the proposal.
To cut down on paperwork, branch applications for automated teller machines connected to a network would no longer be required.
Applications for corporate activities such as opening new branches, conducting trust activities, reorganizations, and some operating subsidiary activities, would be deemed approved if the bank does not hear from the agency within 30 days. This assumed approval would apply only to healthy banks with passing Community Reinvestment Act grades.
Routine banking activities by subsidiaries, would merely require after-the-fact notice rather than the current advance approval, The Comptroller's office also proposed allowing banks to reduce their ownership stake in a subsidiary to a simple majority from 80%.
The changes will produce "a dramatic reduction in burden because you have all sorts of Mickey Mouse applications that you won't have to file," said Comptroller Eugene A. Ludwig. "It will save banks money."
Industry representative welcomed the streamlining.
"It will make the whole procedure much more efficient and easier on the banking system," said James D. McLaughlin, director of agency relations for the American Bankers Association.
Diane M. Casey, executive director at the Independent Bankers Association of America, agreed, but, she questioned the decision by the Comptroller's office to consider permitting a bank subsidiary to offer products and services not allowed the bank itself.
The IBAA has opposed repeal of the Glass-Steagall Act, the wall between commercial and investment banking. Ms. Casey said her group fears this proposal will open the door to securities underwriting by bank subsidiaries.
Regulators cautioned that the proposed rule itself does not permit expanded powers -- it simply allows national banks to apply for permission to enter those new fields through their subsidiaries.
Agency 0ffieials noted that such an application would be open for comment from the public.
Relief from OCC
* Bank subsidiaries may perform activities not now allowed national banks
* Fast review for most corporate applications
* No approval needed for adding ATMs to a network