What Do You Get for $50 Million? Zip: That's the Sum Dick Rosenberg Says the Ban on Interstate Branching Costs BankAmerica Corp., without Providing Any Customer Service or Safety Benefit in Return

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You don't have to talk very long with BankAmerica Corp.'s Richard M. Rosenberg to get the impression that he feels like he's forced to do business in a straitjacket. One arm is still loose, and the question is whether the future will see the bound arm released or the free arm bound.

The 62-year-old banking veteran speaks with disgust about the current state of federal banking regulation. True, BankAmerica has been permitted to maintain a brisk pace of inter and intra-state acquisitions, topped (so far) by its April 1992 merger with Security Pacific Corp., the largest U.S. banking merger ever. In 1991 the organization was among the bidders for Bank of New England and it is reported to be among those interested in bidding on failed subsidiary banks of First City Bancorporation of Texas.

All told, BofA, with total assets of $188 billion, has banks in Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, and Washington.

But the power to branch across state lines-or even to convert multi-bank structures to multi-branch structures-- continues to elude Rosenberg and others who want it. He speaks of an apparent congressional design to render the banking industry "irrelevant."

During an interview in late October, Rosenberg's regulatory outlook was decidedly pessimistic. The chairman and CEO of the nation's second-largest banking organization criticized the FDIC Improvement Act with a vehemence more often heard from community bankers.

Asked if FDICIA would have adversely affected BankAmerica's recovery in the 1980s, Rosenberg, who as vice-chairman under A.W. Clausen played a key role in the recovery, replied: "The fact that the three banking agencies have had to create 83 separate task forces to draw up 120 more regulations clearly could have impeded BankAmerica's turnaround, as it will impede every bank.

"When the Federal Reserve has to take 267 pages to define savings interest rates," he continued, "yes, I think it would have impeded that progress."

Rosenberg discussed these issues and others in an interview with ABA BJ Executive Editor Steve Cocheo. The banker's comments, edited for clarity, came shortly after BankAmerica announced third-quarter earnings of $1.22 per common share.

This was not directly comparable to results from earlier periods, as that quarter was the first to wholly include Security Pacific results. The bank's return on assets and return on equity for the quarter came to 1% and 14.6%, respectively.

Q. Let's look forward for a moment, say to five years from now. Assume that the debate over interstate banking and branching has been settled and the limits are off. Given current capital levels and likely opportunities, what does Bank of America look like?

A. Five years is a very long time. You've made a number of assumptions, any one of which or none of which may come true.

The fact is that our total focus at this point is getting the Security Pacific integration done correctly and improving our position in Texas. As far as the future, we will be opportunistic as opportunities arise.

We don't feel any compulsion that we have to be anyplace. Of course we do have a strategy that would indicate how such opportunities would be prioritized. But I certainly wouldn't share that.

Q. Are there any places you don't ever see as attractive to BankAmerica?

A. No. There is almost no place. We believe we can do a good job of serving any market. Obviously some markets are more attractive to us than others.

There was once a famous Californian who said he wouldn't trade one block of Fresno for all of Manhattan, but I'm not the person who said it. And I don't have any intentions of saying it.

Q. Most of the senior executives I meet came up on the commercial lending side, as was traditional. You have a marketing background. How does your perspective differ? …