The Kansas Senate is scheduled to consider legislation next week that would give the state the power to block bank mergers that result in the loss of jobs.
Under the bill, which has 14 cosponsors, the banking commissioner would be given the authority to weigh the economic impact of any merger application involving a Kansas bank.
The acquiring institution would be required to file an economic impact statement as part of its application. That statement would include disclosures on whether job losses are likely.
If the commissioner concludes that too many jobs would be lost, he could block the merger.
The bill was introduced by Sen. Paul Feliciano, the ranking Democrat on the Senate's commerce committee. Sen. Feliciano said he recognizes that bank consolidation is inevitable, but he wants bankers to acknowledge that job cuts are likely when mergers are first announced.
"Acquiring and merging institutions put out press releases that are nothing but pure propaganda, saying that everything is OK and there's nothing to worry about," he said. "Then, three to six months later they announce there will be a slew of layoffs."
Kansas Bank Commissioner W. Newton Male said his office has no position on the bill, but said it may be unfair to ask buyers to predict consolidation plans before a merger is final.
"I'm a little concerned about how easy it would be to determine what employees they will be laying off if they had little time in the bank itself," said Mr. Male.
Banking trade groups in Kansas have not passed judgment on Sen. Feliciano's bill. "We haven't had time to digest it," said Sue Anderson, president of the Community Bankers of Kansas. "But there is sentiment that consolidation isn't all it's cracked up to be."
Other state bank groups are concerned, however. Roger Beverage, president of the Oklahoma Bankers Association, said the bill may give the Kansas commissioner too much leeway in deciding a merger's fate.
"My suspicion is when word gets out on this bill, you'll see all sorts of legislation," said Mr. Beverage, who also coordinates state trade groups for the American Bankers Association.
A major motivation for the bill is the acquisition of Fourth Financial Corp., Kansas' largest bank holding company, by St. Louis-based Boatmen's Bancshares. Roughly 270 jobs will be cut following the merger, which was scheduled to close Wednesday.
Separately, the Mississippi legislature is considering a bill that would provide tax credits to banks that preserve jobs after a merger. Hearings on that legislation began Wednesday.