The Federal Reserve Board has given North Fork Bancorp. permission to acquire up to 9.9% of Long Island Bancorp.

In an April 13 order, the Fed rejected Long Island Bancorp.'s argument that Melville, N.Y.-based North Fork is illegally engaged in the business of taking minority stakes in banks. Instead, the Fed reiterated past rulings that such investments are legal, provided they get prior approval from the central bank.

The Fed also rejected a Community Reinvestment Act protest, noting that North Fork received a "satisfactory" on its latest exam.

Long Island Bancorp. agreed recently to be purchased by Astoria Financial Corp., after considering bids from several suitors, including North Fork. North Fork has indicated it is still interested in increasing its stake.

Separately, the Fed gave First Midwest Bancorp, Itasca, Ill., permission to acquire Heritage Financial Services Inc., Blue Island, Ill., and its Heritage Bank subsidiary.

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