WASHINGTON --- Tuesday's Senate vote means fidl nationwide interstate branching is less than three years away. Here's a summary of what the bill does:
Interstate banking: There is a distint:lion between interstate branching and interstate banking, and the bill deals with both. One year after President Clinton signs the bill, interstate banking takes effect, Fernfitting bank holding companies to buy banks in any state. States do not have the right to "opt out" of interstate banking.
Branching: As of July 1, 1997, banks can merge with banks in any other state, provided the state has not "opted out," or declined to participate in branching. Branching permits interstate organizations like NationsBank to consolidate their organizations into a single bank.
De novo branching: Banks can establish branches in states where they do not own a deposit taking institution, but only if the state specifically authorizes de novo branching.
Community reinvestment: National bank branches are subject to state laws in the areas of community reinvestment, consumer protection, fair lending, and intrastate branching.
Federal preemption of state laws: The federal banking agencies are required to publish and accept comments on the rules that would have the effect of preempting any state law. Although the measure does not bar agencies from preempting laws, lawmakers expccl it will limit such actions. The measure is aimed primarily at the Comptroller of the Currency, which recently preempted a New Jersey basic banking law.
Suits against failed institutions: The bill incorporates an amendment that permits the federal banking agencies to revive suits against officers and directors of failed banks and thrifts after the statute of limitations has expired, but only under some circumstances. The provision would not apply in cases of simple neglect, but only in those involving fraud or intentional misconduct.
Branch closings: The bill requires regulators to consult with community organizations before permitting an interstate institution to close a branch in a low-income area.
Texas home equity lending: The bill contains a provision sponsored by Rep. Henry B. Gonzalez, D-Tex., that has the effect of reinstating his state's ban on home equity loans.
Foreign banks: Foreignbased banks are permitted to branch to the same extent as U .S. banks. However, foreign-based banks must branch through U.S.based subsidiaries, not from offshore banks. If a foreign bank acquires an institution in another state that is subject to the Community Reinvestnaent Act, the CRA law continues to apply, even if the foreign bank is primarily a wholesale institution.
New study: The Secretary of the Treasurury is required to study the strengths and weaknesses of the U.S. financial system and report to Congress within 15 months of the bill's signing. He is also required to appoint and consult with an advisory committee.