WASHINGTON House Votes to Halt Suits on Loan Errors
The House of Representatives voted to place a moratorium on class actions seeking large penalties against lenders for technical violations of the Truth-in-Lending law. Such suits have proliferated in the wake of last year's Rodash court ruling, which held that homeowners may cancel their mortgages and get back the interest and fees they have paid if even minor errors are found in loan documents.
Making good on its promise to protest defections from the thrift insurance fund, the American Bankers Association attacked Great Western's application to charter two national banks. The 11-page objection blitzed Great Western on five fronts and asked the Comptroller of the Currency to hold a hearing on the thrift's plans to piggyback bank branches on its 400 thrift offices throughout California and Florida.
Facing opposition from many sides, Rep. Richard Baker, R-La., is rethinking his legislation to repeal the Glass-Steagall Act. Mr. Baker is proposing a new system in which the level of insurance depends upon the level of risk taken by the bank.
Photo of Rep. Baker
The government cannot stop thrifts from chartering banks to siphon high- cost deposits out of the Savings Association Insurance Fund, said Jonathan Fiechter, acting director of the Office of Thrift Supervision. He noted that banks and thrifts already own each other. "It's not a new phenomenon," he said. "Regulators can't beat the market."
19674 REGIONAL BANKING First Union in Deal To Be No. 2 in D.C.
First Union Corp. said it has agreed to acquire Columbia First Bank of Arlington, Va., for $222 million in stock. The deal would make First Union second in market share in the increasingly consolidated metropolitan Washington banking market.
Making good on a promise to scale back Wall Street-type businesses, Citicorp said Wednesday that it would eliminate 100 jobs in its mortgage securities area, which is more than half the area's staff. The move follows a severe downturn in collateralized mortgage obligations.
Long reluctant to expand outside the United States after extricating itself from the international debt crisis of the mid-1980s, BankAmerica Corp. is back on a roll in Asia. The region contributed 17% of the $651 million in profits the bank earned from corporate wholesale business last year.
Banking analysts said the leaders of Bank of Boston's international operations have been struggling for power since Constantin Boden, executive vice president of international banking, retired in January. Mr. Boden was in charge of international private banking operations and the overall banking business in Asia, Central America, and the Caribbean. His duties have been split among several executives.
19272 COMMUNITY BANKING N.Y. Bank Fires Back In Suit on Branches
Community Bank System Inc. has asked a New York State judge to dismiss a plaintiff in a shareholder lawsuit and reject a request for a preliminary injunction to block the bank's acquisition of 15 Chase Manhattan Corp. branches. In briefs filed with the New York State Supreme Court in Albany, attorneys for the bank urged the court not to issue an injunction because it would "irreparably harm the company."
Ohio's Mid Am Inc. said it would buy MFI Investment Corp., a fast- growing securities broker-dealer, becoming one of the first community banking companies to make a big bet on Glass-Steagall repeal. The deal will make Mid Am the owner of a brokerage firm with $6.5 million in revenue, 250 brokers, and 75 offices in 19 states.
California Gov. Pete Wilson appointed accountant Conrad Hewitt as the state's bank superintendent. The superintendent's job had been vacant since September, when James E. Gilleran resigned to become chief executive officer of Bank of San Francisco.
Confusion among stockholders forced Suffolk Bancorp to withdraw a proxy proposal to permit the quintupling of its outstanding shares to prevent a hostile takeover. Officials of the $812 million-asset company had asked shareholders to approve an increase in the number of authorized common shares to 37.5 million from the current 7.5 million.
United Bank of Philadelphia is suing the Resolution Trust Corp. for $240,900, charging it with breach of contract related to a soured loan sale. The amount is the difference between what the RTC paid the bank for accrued interest on the loans and what the bank says it is owed.
19647 SMALL BUSINESS SBA Overhaul Seen Squeezing Borrowers
The Small Business Administration has announced a series of changes to eliminate the agency's reliance on congressional appropriations. The agency proposed reducing the percentage of each loan it would guarantee and adding new fees. It also said it would centralize processing, consolidate operations, and eliminate up to 500 full-time jobs. While the proposals were largely viewed as favorable, some lenders are worried about possible side effects.
First National Bank of Chicago said it has made a $1 billion, five-year lending commitment to small businesses. The pledge is the biggest part of a $2 billion loan program announced by Richard Thomas, chairman of the bank's parent, First Chicago Corp.
19565 COMPLIANCE A Respa Rulemaker Keeps Plugging Away
When Grant E. Mitchell was asked to write rules to implement the Real Estate Settlement Procedures Act, he thought it was going to be a fairly simple task. Eleven years later, Mr. Mitchell, a senior attorney for Respa at the Department of Housing and Urban Development, is still at it.
The Federal Deposit Insurance Corp. and the Federal Reserve Board have set up new ways for banks to challenge decisions by examiners. The efforts follow a similar move in 1993 by the Office of the Comptroller of the Currency.
19643 CREDIT UNIONS Credit Unions Caught In '94 Rate Squeeze
The nation's leading credit unions got squeezed by last year's run-up in interest rates. The top 100 credit unions boosted their assets by just 6.3% - the slowest growth in at least five years, according to an American Banker survey. And the group's earnings fell 9.7%, an abrupt change after three years of double-digit gains.
See front page chart, page 10 mugs, and a listing on page 14
The National Credit Union Administration is still actively supporting Patelco Credit Union's internal investigation of alleged management abuses. Earlier this year, when the agency originally supported the probe, Patelco was seeking a merger with a federally chartered credit union.
19318 CREDIT/DEBIT/ATMs MasterCard Contest For Maestro Push
Last year, MasterCard more than doubled the number of merchants accepting Maestro, its on-line debit card. On the heels of this growth, Maestro U.S.A., the MasterCard subsidiary, is beginning a national sweepstakes for merchants to encourage them to display decals bearing the Maestro logo.
NationsBank Corp. has teamed with Nabanco, one of the banking industry's most aggressive transaction-processing competitors, to sell credit card support services to retail merchants. The joint venture will serve merchants in the Southeast and Texas.
Visa International, as expected, reported it had a banner year in 1994, with total consumer payment sales volume jumping 22%. The San Francisco- based association said it was the only payment system to register double- digit growth in each of its regions. Credit and debit volumes rose to $630.6 billion from $519 billion in 1993.
The number of ATMs in the United States increased by more than 14,000 last year, bringing the total above 100,000 for the first time. The total rose by 15% to 109,080, according to the Chicago-based newsletter Bank Network News. The previous year's growth was 8.6%, to 94,822.
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19702 INVESTMENT PRODUCTS Mellon Wins Plaudits For Dreyfus Revival
Mellon Bank Corp. is winning plaudits for a revival at Dreyfus Corp., which the Pittsburgh-based banking company acquired last year. Assets are growing and analysts expect Dreyfus to help bolster Mellon's bottom line this year. The upbeat views are a departure from the skepticism that greeted the deal last year.
A threat by South Carolina regulators to shut down NationsSecurities operations in the state is expected to embolden other states in their regulation of bank brokerages. The threat to the NationsBank Corp. subsidiary stems from an investigation of sales practices.
Richard L. Saalfeld has left Corelink Resources, the bank investment products marketing firm he founded two years ago. Mr. Saalfeld, whose last title was chairman, left late last month, days before Corelink's biggest shareholder, Concord Holding Corp., was purchased by Bisys Group.
SunTrust Banks Inc. is gearing up to launch an actively managed international equity mutual fund, in a bid to increase its share of the retirement plan market. The $42 billion-asset banking company has set up a common trust fund through its SunBank Capital Management subsidiary, and has hired Daniel R. Jaworski, a new portfolio manager, to manage the assets.
19655 MORTGAGES Countrywide Quits Pricecostco Talks
Countrywide Credit Industries has turned down a chance to originate home loans to customers of Pricecostco Inc. Countrywide said it had been working "night and day" with the mega-retailer, but Pricecostco was courting other lenders at the same time - and Countrywide didn't like it.
Transamerica Financial Services Co. has completed the purchase of $1.03 billion of home equity loans from ITT Consumer Financial Corp. The deal, which had been widely expected, represents a major expansion of Transamerica's home equity lending operation.
Mortgage originations fell by less than 25% last year, to $774 billion, the Mortgage Bankers Association said. David Lereah, MBA's chief economist, said his estimate had been for originations of $750 million to $775 million, down from $1 trillion in 1993.
The National Association of Mortgage Brokers decided to stay in Phoenix, and not move to Washington, D.C., as it had previously considered. The decision may have cost the group its skilled staff vice president for government relations, Mary J. Burt, who resigned days before the meeting, apparently anticipating the strategy change.
19588 TECHNOLOGY Wachovia Joins Elite In Check Imaging
Wachovia Corp., eager to show it has joined an elite group of institutions deploying check imaging systems, said it is processing more than one million items a day using the technology. Officials said they had passed the processing milestone last month, using a "proof-of-deposit" image check processing system from AT&T Global Information Solutions Corp.
The Social Security Administration and the Treasury Department's Financial Management Service have developed a system to deliver Social Security benefits electronically to U.S. expatriates. Designed to reach retirees in developing countries with unreliable post offices, the electronic benefits transfer system uses the Cirrus and Citibank automated teller machine networks.
Moving to upgrade its branch automation system, NationsBank will pay $100 million over four years to International Business Machines Corp. for 15,000 to 20,000 file servers and workstations, and associated consulting services.
H&R Block Inc.'s hasty retreat from the personal finance software business sends a cautionary message to companies aspiring to play key roles in home banking. The company announced that its Block Financial Corp. subsidiary has put Block Financial Software up for sale.
19657 FINANCE Keycorp and Society: Where's the Payoff?
A year after Keycorp and Society Corp. completed a merger forming the nation's 10th-largest banking company, Wall Street is beginning to wonder when the deal will pay off for investors. The stock of the Cleveland-based company has been held down by market displeasure over sluggish revenue growth, analysts say.
Chase Manhattan Corp. shares led a broad bank stock rally on Thursday after investor Michael F. Price disclosed a 6.1% stake in the New York company. Mr. Price, president of Heine Securities, is known to pressure management of underperforming companies to improve shareholder returns.
Bank stocks' strong performance in the first quarter left some observers encouraged and others worried. In an American Banker survey, bank shares topped the performance of stocks in general. The greatest returns were provided by Shawmut National Corp., Putnam Trust Co., and Michigan National Corp., which are being acquired.
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Unrecognized losses on bank securities rose by 60% during the fourth quarter to $19.2 billion, according to a report by Veribanc Inc. Veribanc's analysis of Federal Reserve data determined that losses has jumped from $12 billion in the third quarter, reflecting further damage due to higher interest rates.