WASHINGTON - A federal-state working group expects to have preliminary proposals in hand by yearend on how to regulate banks that operate across state lines.

The 10-person working group of regulators was created this year to deal with the changes brought on by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. Its goal: to prevent overlapping and duplication among state and federal agencies.

The group was split into four subcommittees - training, examinations, technology, and applications.

John L. Bley, a member who is Washington State's director of financial institutions, said proposals from each subgroup should be completed by the end of the year.

At that point, the proposals would be considered by the entire group.

Group participants said they are working toward automating and standardizing application procedures, promoting more information sharing among agencies, and making training more uniform.

But of paramount importance to many of the states' representatives is clarifying exam procedures for interstate banks.

"The key to the group is establishing one agency contact and a seamless exam format between the states and federal agencies," said Walter Mix, California's chief deputy superintendent of banks.

Earlier this year, state regulators voted unanimously to allow interstate banks to deal with just one state regulator. The regulator would then have the responsibility of sharing information with federal agencies, saving the bank from additional paperwork and headaches.

Now the working group's task is implementing the result of that vote, but group members said there is no definite timetable for implementation.

Changes to application procedures for various actions also are pending. Mr. Bley said the group will attempt to make requirements consistent across agencies. He also said new technologies could automate applications, further diminishing the paperwork burden on banks.

The group also is studying other ways to use technology for banks' benefit. Mr. Bley said more sharing of information among agencies via computers would help bring greater consistency in exams by ensuring that all involved see the same documentation.

Though interstate branching rules don't take effect until July 1997, Mr. Bley said the group has to be aggressive to help states that plan to begin early, or "opt in."

"We've got a very aggressive time frame," Mr. Bley said.

Beyond Mr. Bley, the group's members include banking commissioners from California, New York, and Utah. Federal regulators represented are the Federal Reserve and the Federal Deposit Insurance Corp.

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