WASHINGTON -- The Association of Financial Services Holding Cos. is floating a proposal that would give banks interstate branching rights if they meet several tests required of savings and loans.

The proposal, which was delivered last Friday to Rep. Frank Annunzio, D-Ill., the chairman of a House Banking subcommittee, would give banks the same interstate branching powers that S&Ls received earlier this year from their regulator. The Senate, however, voted in June for a 15-month moratorium on thrift branching.

Like S&Ls, banks would have to meet the qualified thrift lender test, which requires that a given percentage of the institution's assets be invested in home and consumer loans.

Banks would also require a satisfactory Community Reinvestment Act record, exceed minimum regulatory capital requirements, and meet several other tests.

"This may be distasteful to some, but it may be the path to use," said Patrick Forte, president of the Washington-based trade group, which represents about 45 financial services firms. "Anyone who hasn't realized that there is a price to pay for more flexibility is either hallucinating or asleep."

Mr. Forte said the plan could receive support, noting that last year the House Banking Committee approved a provision that would give national banks more branching "flexibility" if they met the qualified thrift lender test.

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