Great Western Financial Corp. said Friday that California state banking laws prohibit H.F. Ahmanson & Co. from carrying out its proposed acquisition. Yet the claim seems dubious at best, according to state regulators.
Ahmanson has proposed that it would merge Great Western into a Washington state bank charter it already has. It would then turn Great Western into a branch network of that Washington subsidiary, and eventually convert the entire entity into its federal thrift charter, according to Great Western.
California's interstate banking law forbids the first part of that conversion from taking place, Great Western spokesmen asserted. But regulators disagreed. "Obviously Great Western must have read through something with a highly technical fine tooth comb," said David Scott, chief state banking examiner for California. "It was not the intent of our legislation to block this type of acquisition."
Mr. Scott said he was not aware of anything on the books that would prohibit Ahmanson from doing what it has proposed. The only merit to Great Western's assertions, regulators said, is that the regulatory process could take longer for Ahmanson to complete than for white knight bidder Washington Mutual Inc.-because Ahmanson's proposal needs more approvals.