NationsBank Intentionally Discriminated, Suit Says
A civil rights group filed a class action accusing NationsBank of intentionally discriminating against black mortgage applicants. The lawsuit opens a potentially expensive chapter in the banking industry's scramble to comply with fair-lending laws.
To deflect a presidential veto, House lawmakers toned down legislation that would grant a CRA break to nearly 7,000 banks.
In a victory for banks, the House Banking Committee voted to limit the Federal Deposit Insurance Corp.'s authority to build reserves beyond the 1.25% ratio set by law.
With votes scheduled in the House and Senate banking committees on major legislation, bank lobbyists were scrambling to prevent creation of a "super bank charter" for thrifts that would grandfather their existing powers.
The Senate Banking Committee voted to give banks that bought thrift deposits a break on the bill for fixing the Savings Association Insurance Fund. Thrifts would have to pay 85 cents per $100 of deposits, but banks could subtract 5% of their thrift deposits before doing the rest of the math.
Unexpected Choice For B of A Retail Chief
In a surprise move, BankAmerica gave vice chairman Thomas E. Peterson, 60, control of its retail activities. Another vice chairman had been widely viewed as the rising star in the retail area.
Thomas Garrott, head of National Commerce Corp., says banks can't compete with nonbanks anymore - but he's not worried. He's planning to sell off the Memphis company's bank while keeping its financial services operations.
Stock analyst George Salem's prediction of a Wells Fargo-First Interstate merger has fueled price rises for First Interstate stock and skepticism among other analysts.
Banks have been leapfrogging their way up the asset-size ranks through acquisition, according to an American Banker survey. In the 12 months through midyear Southern National jumped from 66th to 36th; Union Planters jumped 12 spots, to No. 66; and Hibernia climbed from 92d to 81st.
Mellon's extension of its chairman's contract means the bank probably won't be sold anytime soon, analysts say. Frank V. Cahouet, 63, who had said he was determined to keep Mellon independent, has now been booked until December 1998.
A Time of Trial For State Trade Groups
State banking associations, which once were glorified social clubs for like-minded businessmen, are suffering through an unprecedented year of discord. Structural changes in the industry have prompted bitter legislative battles, and some say the days when such groups could speak with one voice to their legislatures may be gone for good.
Pressure is mounting for the state trade groups to merge. "There are obviously too many trade associations," says Frank Pinto of the Pennsylvania Association of Community Bankers. "The strong are going to be survivors."
Silicon Valley Bancshares, which has helped to fuel technology growth and venture capital start-ups on the West Coast and in Massachusetts, may soon be tapping into the high-tech-heavy Mid-Atlantic states.
Farms have gotten bigger, and so have the loans they want - straining the small banks that have financed U.S. agriculture for generations. But a growing number say the way to cope is through new types of relationships with other community banks, instead of going to city-bred correspondent banks for help,
Bank of Commerce in San Diego is wrapping up a $5.4 million preferred stock offering that officials of the expansionist bank hope will boost SBA lending.
Wells Offers Discount For Not Using Tellers
Wells Fargo, in an apparent first, is offering checking discounts to small businesses that agree to use ATMs rather than tellers.
Legal Eagles Grapple With Interstate Era
Their attire was casual, but the issues compliance lawyers contemplated at the three-day seminar in Palm Beach were serious - like anticipating state reactions to the Riegle-Neal act.
In what may be part of a trend, BayBanks and Marine Midland have just opened inner-city offices in South Boston and the South Bronx.
Compliance exams covering fair-lending and other consumer laws will be simpler and less time-consuming for small national banks under streamlined exam procedures issued by the Comptroller's office.
Hard-Driving Boss Who Shook Up GTE Federal
Wendell A. Sebastian went to GTE Federal Credit Union with a reputation for ruthlessness. In five years, he has transformed the once sleepy institution into one of the industry's fastest growers, more than doubling its assets.
Stanford Federal Credit Union has put mortgage lending in cyberspace through a new feature of its World Wide Web site. "Someone can call this up on a Saturday or Sunday after they've looked at a house, fill out the application, and get an answer 24 hours later," says the chief executive of the California credit union.
A Go for Megamerger In Card Processing
The Federal Trade Commission approved First Data's $6.7 billion merger with First Financial Management. A commissioner warned that future deals might not be approved so easily, but the warning came too late, some critics said: The new First Data will start with a 45% market share.
Delinquencies rose in April-June, for the third quarter in a row. Some experts say cobranded cards with bonuses are leading consumers astray.
With payment services becoming more like commodities, executives at the ABA's recent credit card conference debated the future of branding.
Ideon Group ended its half-year-old servicing arrangement with the slow- growing PGA Tour Partners MasterCard, issued by a SunTrust unit, and fired 75 people, including its CEO since December.
Per-Branch Annuity Sales Seen Tapering Off
Though bank sales of annuities continue to rise, a new study suggests that per-branch volume is actually stagnant or declining.
The NASD approved a set of revised rules for bank brokerages that promises the quell many bankers' fears.
A New York appeals judge ruled that U.S. Trust and the former butler of tobacco heiress Doris Duke are still co-executors of her estate.
Michael C. Baker won't have much time to ease into his new job at Amsouth, as executive vice president in charge of its newly formed Capital Management Group. The Barnett veteran's mission is to consolidate four investment services businesses into a single unit.
Mozilo: Credit Scoring Can Promote Bias
Angelo Mozilo of Countrywide Funding, the nation's largest independent mortgage originator, warns that using credit scoring to approve mortgages could lead to sever bias against minority and low-income groups.
Banks will have to remain vigilant if they want to step up mortgage lending to credit-impaired borrowers, industry experts warn.
Norwest Mortgage hired a superstar, Mark L. Korell, as its No. 2 executive. The move seems a sign of plans to keep expanding fast. Already the biggest mortgage retailer, Norwest seems to be aiming for higher rank in Mr. Korell's areas - wholesale, correspondent, and servicing operations.
Rep. Rick Lazio of New York, chairman of the housing subcommittee of the House Banking Committee, is proposing to largely bar the government from insuring home loans except those made to first-time and low-income homebuyers.
North American Mortgage named Dorothy Beattie to the newly created post of senior vice president for production asset management.
Internet's Currency? So Far, It's Plastic
For all the talk about creating new forms of money for commerce over computer networks, an old standby is beating them to the punch. It may be too soon to draw conclusions about ultimate payment preferences on the Internet and other interactive computer systems, but a study for Verifone shows credit cards have all the early advantages.
Shawmut pulled the plug on its attempt to provide banking services via interactive television. The project it announced in January with AT&T was to lead to a launch in the second quarter but ran into repeated snags and consumer indifference. Most bankers see PC networks as more realistic.
Gerrit Schipper, president and CEO of Philips Home Services, is adding electronic mail capability to the company's screen telephones used for home banking. Philips and Visa will be the first distributors of Oracle Corp.'s E-mail technology to the advanced-phone market.
Settlement risk is among one of the primary concerns of international bankers, according to a new study. Derivatives risk seemed to rank far behind.
ATM scam artists will have a new kind of safeguard to beat if Kevin McQuade and Thomas Drury of Sensar Inc. have their way. Their Irisident is designed to identify cardholders by scanning their eyes.
Natwest Seeks $6B For Its U.S. Bank
After expanding in the United States for more than two decades, London- based National Westminster is preparing for a massive retreat. Sources say it retained Goldman Sachs to help sell its U.S. commercial bank unit. The asking price is said to approach $6 billion, which would make the sale one of the largest U.S. bank deals ever.
Consumer lenders could soon face tough times, a PaineWebber study concludes. Customers can't just keep on borrowing more and paying less, observes analyst Gary Gordon, who's wary about shares of the major credit card issuers and finance companies. "The sky may not be falling," he says, "but it sure looks like the roof is leaking."
The latest numbers make a strong case that NationsBank should be counted among the top players in derivatives trading, a business traditionally dominated by the money-center banks.
Merton Miller, the Nobel Prize-winning economist at the University of Chicago, says derivatives have been getting a bad rap. He says recent big losses in derivatives were simply desperate gambles that didn't pay off. On balance, he argues, derivatives have worked to reduce risk.