OCC officials now expect their agency will approve Barnett Banks application to acquire the Florida branches of Glendale Federal Bank, possibly by Election Day.
It also appears likely the Justice Department will let pass without immediate retaliation its ultimatum to Barnett to reach a settlement by the end of October or face an official complaint.
OCC approval would mean that yet another federal banking agencyand the one that is most closely linked with the White Housewould have examined Barnett and failed to find the same reasons for alarm that led to Justices investigation. The OCC is conducting a Community Reinvestment Act examination of Barnett now, and is expected to finish soon.
Agency officials have indicated the exam is going well, and that no smoking gun has been found.
The agencys emerging attitude toward approving Barnett will make it extremely tough for the Justice Department to win a consent decree against Barnett thats anywhere near as Draconian as the one it reached with Chevy Chase Federal Savings Bank.
Approval could be taken to signal that OCC Comptroller Eugene Ludwig has been moved by both intense lobbying from industry leaders and by the frosty reception he has received in recent appearances before bankers.
Ludwig has voiced concern that his reputation as comptroller will be forever linked with fair lending and the CRA. Siding with the banks on the Barnett/Glenfed deal would help restore some of his reputation as an administrator whos eager to help banks get the powers and financial momentum needed to take on lesser-regulated financial services companies.
And approving Barnett this month also conceivably could persuade some bankers to spend money for Democratic candidates in what is likely to be a bloody Election Day for the majority party.
For the moment, bankers appear more interested in using their money to fight the Clinton administration. The Savings & Community Bankers of America, meeting in Orlando, Fla., for their annual convention the week of Oct. 17, announced they had earmarked $100,000 in the 1995 budget to use in a legal battle with Justice.
News of the war chest caused such a stir that SCBA officials quickly curbed their aggressive ways. Paul A. Schosberg, president and CEO of SCBA, said We will go for understanding and conciliation first, then legal action. He added that the criteria for taking legal action would be that an issue had a potentially serious impact on the long-term franchise value of the industry.
Schosberg and David E.A. Carson, incoming SCBA president, backed off despite comments at the convention by Jonathan Fiechter, acting OTS director, that the concept behind the latest Justice-bank settlement, involving Chevy Chase , represents an application of the law that is untested in the courts. That appeared to represent a clear signal that Fiechter has trouble with the DOJ approach and that he is concerned that DOJ is showing up regulators with its aggressiveness.
Clearly, it is wrong for a financial institution to refuse to markets its products to an area solely because of the race of its residents, Fiechter said. But it may be rational for a financial institution to focus its marketing efforts on higher income, higher net worth areas.
The American Bankers Associations board already has approved creating a fund to help Barnett and other institutions fight Justice, and the Federal Reserve Board is supporting Barnetts claim that it doesnt discriminate.
Carson and SCBA officials gave a plethora of reasons for their concern. James F. Montgomery, first vice chairman of SCBA and chairman and CEO of Great Western Financial Corp., said that lending to minorities is one of the white hats the thrift industry owns because it has a relatively good record in that area. He also cited the fact that Chevy Chase was being charged with fair lending bias even though it is the largest credit card lender in the District of Columbia area, and credit cards are one of the lending lifelines to all consumer borrowers.
He also cited the fact Chevy Chase was being forced to open branches in Washington, another jurisdiction under existing interstate branching laws, and that it has been under regulatory restrictions because of low capital, rules that reduced opportunities for Chevy Chase to expand into new markets.
Carson added, No institution can open a branch everywhere, and thrifts are clearly the leading lenders to the inner city.
Schosberg also noted that when chiefs of trade groups met with the DOJ fair lending bias unit Oct. 12 it marked the first time most bank trade groups had ever set foot in the Justice Department building.
Schosberg said that one of the first things the DOJ lending bias unit acknowledged after initial denials is that the insured lending industry has legitimate concerns about the DOJ role in ensuring compliance.
He said one of the concessions the DOJ fair lending unit made at the meeting is that it will again be part of the 10-member interagency task force that is seeking to update guidelines on fair lending rules.
