WASHINGTON Gingrich Weighs In For Repeal Measure
The House Banking Committee gained an important ally when Speaker Newt Gingrich warned a rival panel to exercise restraint in reworking Glass- Steagall repeal legislation. Rep. Gingrich's letter to Commerce Committee Chairman Thomas J. Bliley, R-Va., was viewed by bank lobbyists as a clear indication that the House leadership places a high priority on passage of a modernization bill.
A new study by two Fannie Mae economists concludes that minorities pay slightly higher rates than whites for government-backed mortgages - a finding that could intensify concerns about bias in loan pricing.
A draft copy of the SAIF Industry Advisory Committee's report makes an urgent case for fixing the thrift fund. Among the remedies proposed are its merger with the Bank Insurance Fund. The committee also advocates requiring banks to pay part of the annual interest on bonds floated by the Financing Corp. in 1987 to begin the savings and loan bailout.
The insurance industry is likely to get more time to study two bank insurance powers cases - a setback for those who had hoped the Supreme Court would agree this summer to hear them. Barnett Banks Inc. has appealed a federal appellate court decision barring bank insurance sales, and insurers are considering appealing a contradictory appellate decision allowing a Kentucky bank's insurance sales.
19768 REGIONAL BANKING Bank of N.Y. Buys NationsBank Trust
Bank of New York Co. said it agreed to buy the corporate trust business of NationsBank Corp. for an undisclosed sum. The business includes agency accounts representing more than $167 billion of outstanding securities. Analysts guessed that Bank of New York paid $80 million to $120 million, and they said it would be able to squeeze a 50% gross margin out of the business.
Richard M. Rosenberg, BankAmerica Corp.'s chairman, has tried to put the kibosh on rumors that the company is looking outside for his successor, or considering acquisitions of retail banks in the Northeast or Chicago. Mr. Rosenberg said the board is planning to hire his replacement from within the company and added that directors had not hired a recruiting firm to search for an outside successor.
Some BankAmerica Corp. branches in small Texas communities soon may go on the auction block, industry sources say. The company is expected to release, as early as this month, a list of as many as 21 rural branches that it wants to sell. The branches, mostly in towns of fewer than 5,000 residents, are said to have less than $20 million apiece in deposits.
Most of the estimated 85,000 Russian immigrants living in Brooklyn's Brighton Beach neighborhood are likely to say they don't use banks when asked where they keep their money. As in other immigrant communities, the main problem for banks trying to win customers in Brighton Beach is language.
Activist investor Michael F. Price, head of the mutual fund company Heine Securities Corp., is said to have demanded of Bay View Capital Corp.'s management that it find a way to get the share price up to the acquisition premium or start looking for a buyer. He spoke as a shareholder at the California thrift's annual meeting.
19722 COMMUNITY BANKING Wells Admits Pair Attacked Small Rival
A spokesman for Wells Fargo Bank confirmed that two of its business development employees had spread an unfounded rumor that a tiny competitor, East County Bank, was about to fail. The spokesman stressed that it was "an isolated incident" involving two employees. Wells made a private monetary settlement with the small bank.
National Bank of Commerce of Birmingham, Ala., scored a big competitive coup recently when it hired 13 disgruntled bond salesmen from neighboring giant AmSouth Bank. The sales people, most considered top-notch producers, left AmSouth after the $17.1 billion-asset institution announced three weeks before that it was discontinuing its correspondent-banking bond business.
Seven months after its conversion to stock form, New York City's Carver Federal Savings Bank is battling a shareholder's accusation that it misled investors. Robert L. Dougherty is suing the thrift, claiming that the prospectus for its October 1994 conversion contained misrepresentations. He argues that the bank sold too much stock for too high a price per share.
Independent bankers in West Virginia are considering organizing a trade group because they don't think their views are represented by the West Virginia Bankers Association, an organizer of the new group said.
19615 SMALL BUSINESS Barnett Pinpointing Profitable Customers
As director of small business banking at Barnett Banks Inc., Steve Hickman is finding out what kinds of companies are in a market, and how he can market to the customers who will turn a profit for the bank. This is the first and often the most difficult job facing bankers targeting small companies. It is also the first step in determining how to develop appropriate products and services.
Interest in pooling loans backed by the Small Business Administration has continued to pick up steam, with volume in the secondary market jumping 36.4% in the seven months ended April 30. Data from Colson Services Corp., New York, the fiscal and transfer agent for the secondary market in SBA loans, show that more than $1.2 billion of loans backed by the agency changed hands during the period. This compares with $909 million during the same period of fiscal year 1994.
19625 COMPLIANCE Fix-It Night at Bank Boosts CRA Stance
Three nights a week in the spring and fall, the Bedford-Stuyvesant branch of Roosevelt Savings Bank is transformed into a home repair workshop. The program gives hands-on instruction in carpentry, tiling, plumbing, and electrical systems. The goal is to encourage homeowners to improve their neighborhoods, and is praised by regulators as an innovative way to comply with the Community Reinvestment Act.
The total convicted of fraud at financial institutions last year fell nearly 22%, to 864 people, the Justice Department said. Declining convictions could mean that the department is doing a better job fighting bank fraud or that fewer crimes are being perpetrated. However, John Byrne, senior counsel at the American Bankers Association, said the drop might be a result of less enforcement.
19720 CREDIT UNIONS State Trade Groups Eye a Consolidation
The borders between state credit union leagues continue to blur as California and Nevada join a surging tide of consolidating trade groups. The boards of the California and Nevada leagues on May 19 approved letters of intent to consolidate services. Mr. Chatfield declined to call the arrangement a merger, saying much nuts-and-bolts work remains to be done. If successful, it could guide the way for future alliances.
The National Credit Union Administration unanimously approved Lusitania Federal Credit Union's application to convert its charter. The approval paves the way for a July 8 membership vote on adopting a mutual thrift charter. Officials and lawyers connected with credit unions said the new entity, to be called Lusitania Savings Bank, would be operating by Sept. 30.
19649 CREDIT/DEBIT/ATMs Smart Card Specs Nearing Completion
Europay, MasterCard, and Visa said they will release card and terminal specifications for integrated circuit cards for payment systems at the end of the month, moving the industry closer to a worldwide framework for the use of smart cards.
Visa International has announced a computer networking partnership with International Business Machines Corp. Visa said it would use Advantis, IBM's global business communications network, to deliver a broad range of information services to its more than 20,000 members.
Nearly half the merchants surveyed by Dove Associates Inc. said they would accept smart cards with stored value from customers. Dove said that companies looking to position themselves as players in the smart card market in the United States have cause for optimism.
Fleet Financial Group, Providence, R.I., is issuing a cobranded card with Gulf Oil Limited Partnership. Consumers in the Northeast can earn a 4% rebate on Gulf gasoline purchases and 1% on general purchases, for up to $350 annually.
19635 INVESTMENT PRODUCTS Study: Thrifts Double Bank Annuity Sales
Thrifts sell twice as many annuities as commercial banks, in relation to their asset bases, according to a study. Compared with commercial banks, the top annuity-selling thrifts in the nation had markedly better sales-to- assets ratios, according to the fourth-quarter 1994 survey by the Bank Insurance Market Research Group.
While some small banks are considering dropping out of mutual fund management, some big ones, as well as fund companies, are preparing to step into the breach. Many smaller players are looking for a way out, or at least to cut costly maintenance of mutual funds while retaining the product. Some companies are arranging to take over management of bank-run funds, while others are snapping up assets and merging them into existing fund complexes.
The conventional wisdom holds that fund programs with a higher percentage of long-term funds are more profitable than shorter-term money market portfolios. However, more than 70% of bank equity funds waive a large portion of their fees, either to build business or because they can't afford to charge the full advisory fee. And often long-term funds lack sufficient assets to offset their fixed costs.
Though U.S. mutual fund sales in April increased 93.5% from March, sales at many bank investment programs were flat for that period. Bank customers, who tend to be more conservative than the average fund investor, were demanding investments with guaranteed returns - certificates of deposit and fixed annuities in particular, executives said.
19703 MORTGAGES GMAC Unit's Chief Resigns After 2 Years
Mark. L. Korell stepped down as chief executive of GMAC Mortgage Co. less than two years after assuming the post and beginning a major expansion. His interim replacement will be John D. Finnegan, the company's executive vice president and chief financial officer of GMAC Financial Services.
Prudential Home Mortgage Co. is attracting interest from at least three potential bidders, each with its own motive. The most intent may be GE Capital Services. Market sources say the company's mortgage unit, which has surged into the top ranks of mortgage servicers in recent years, has hired Bear, Stearns & Co. to investigate Prudential Home.
Several of California's largest thrifts are jumping into the home equity lending arena. Home Savings of America and California Federal Bank are among the thrifts that have recently turned to second mortgages to fill in for a lack of home-loan refinancings and as a way to diversify their offerings.
At least three dozen class actions have been filed against lenders over alleged failure to disclose when mortgage insurance is no longer required. Zimmerman Reed, Minneapolis, and Langston & Frazer, Jackson, Miss. - both law firms that specialize in class actions - have filed the suits.
19756 TECHNOLOGY Visa-Philips Team in Remote Banking Push Visa International has agreed to collaborate with Philips Home Services on a wide range of electronic commerce projects. The new partnership will most certainly lead to a Visa application for Philips enhanced screen phones, currently used in Citicorp's home banking program. But officials say the alliance can be a laboratory for other home banking innovations, including the promotion of home banking on an international scale.
Fleet Financial Group is going companywide with neural network software intended to help tailor its cross-selling efforts to the needs of individual customers. Bank officials say Fleet's use of the technology is part of a shift to a more aggressive sales culture in which bank employees try to anticipate customer needs.
A recent home banking conference reignited debate over banks' partnering with potential rivals and the merits of various delivery methods. The Home Banking Forum, sponsored by Faulkner & Gray, drew the most vocal and provocative characters from the realm of remote banking.
Metropolitan Bank for Savings of Arlington, Va., is one of a growing number of financial institutions organized around the belief that the branch office need not be the foundation of every bank. President and chief operating officer Mitchell H. Caplan has guided his thrift into a virtually branchless organization, doing most of its business over the phone or through the mail.
19788 FINANCE Insiders Big Sellers Of Banking Equities
Sending a signal that the 1995 rally in bank stocks may be peaking, industry insiders sold large chunks of their shares during April. What began as a trickle of bank insider sales in March turned into a gusher as the banking sector's stock rally continued.
A new wave of takeovers may be getting under way in the thrift industry. Firstfed Michigan Corp. and Charter One Financial Corp. agreed to merge in a deal valued at $1.1 billion, and First Union Corp. agreed to buy RS Financial Corp., for $111.6 million. Analysts said more sales could be in store as falling interest rates boost thrifts' appeal.
Sallie Mae petitioned U.S. District Court for the District of Columbia to block the election of dissident directors. The litigation was the latest offshoot of management's proposal to privatize the government-sponsored enterprise. Dissidents contend the move is unwarranted and last week claimed victory in a proxy battle to elect directors supporting that view.
Analyst Nancy Bush of Brown Brothers, Harriman & Co. has removed her "trading buy" recommendation from the stock of NationsBank Corp. Though the bank remains attractive on a valuation basis, Ms. Bush said, the superregional company had reached her price target and also "tends to get whacked when worries about the bank stocks start to surface."