Texas Banking Law May Open `Two-Way-Street' / Says Harris

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Texas' proposed interstate banking law could open up "a two-way street" with Oklahoma banks, according to Robert E. Harris , executive vice president of the Oklahoma Bankers Association.

"It would obviously set up a free flow of market activity, back and forth," Harris said Monday, of Texas' interstate banking bill.

"It would complement our state statute," Harris said.

New laws adopted by 35 other states and the slump in oil prices, which threatens the health of many Texas banks, helped prompt a sudden change of heart by banking groups that previously opposed interstate banking.

Texas, the largest state to ban interstate banking, is about to open its doors to outside banks for the first time in its 150-year history.

"I think people realize it's an idea whose time has come," Texas Banking Commissioner Jim Sexton said.

There are some Oklahoma banks with their eyes on Texas, in terms of scouring the Lone Star State for good acquisition prospects, Harris said.

Texas' interstate banking bill would give Oklahoma banks a six-month jump on acquiring their south-of-the-border cousins.

Effective Jan. 1, 1987, any bank from any state could buy any Texas bank - "healthy or sick," according to Sexton, the Texas banking commissioner.

That's what bankers call a national, non-reciprocal interstate banking law.

"The Oklahoma law is a little more restrictive than ours," Sexton said.

Oklahoma's interstate banking law, on the books since May 7, currently permits the interstate sale of only failed or failing Oklahoma banks.

The Oklahoma law does not permit the interstate sale of healthy banks until July 1, 1987 - six months after the effective date of the proposed Texas law.

"If an Oklahoma bank wants to acquire a Texas bank, all they will have to do is get on the interstate and drive south in January," Sexton said. "We'll have to wait six months before we can do anything in your state."

In July, Louisiana Gov. Edwin Edwards signed an interstate banking bill that is almost identical to Oklahoma's new law.

The Louisiana law permits the emergency interstate sale of failed and failing Louisiana banks, according to Ken Pickering, Louisiana banking commissioner.

But Louisiana, like Oklahoma, has put regional, reciprocal interstate banking on hold until July 1, 1987.

The Texas banking commissioner said he is glad that Texas' proposed interstate law has fewer restrictions than those in neighboring states.

"The best thing about it is that it's non-reciprocal," Sexton said.

"I'm happy with the bill, but it's getting a few more ornaments on it than I would like," Sexton said.

For example, Sexton said he is not crazy about a provision in the bill that would bar a financial institution from owning a Texas bank and a Texas savings and loan association.

"You start adding things and you burden down a potential acquirer," Sexton said. "You could drive people away."

So Sexton will keep a watchful eye on the interstate banking bill early today, when it goes up for a vote on the floor of the Texas House of Representatives.

The Texas Senate promptly passed the bill last Wednesday, after Texas Gov. Mark White added it to the special session's agenda.

With 15 bank failures in Texas so far this year, the Legislature is very attuned to providing solutions, Sexton said.

"Yes, we're the king, I'm afraid," Sexton said, of Texas' string of bank closings. "But we've also got more banks than anyone else. We've got 2,000 banks."

By comparison, Oklahoma has 535 banks.

Nine Oklahoma banks have been declared insolvent so far this year.

"We need capital - the same as Oklahoma does," Sexton said.

The quest for capital is providing the momentum for passage of an interstate banking law in Texas, Sexton said.

Not all of Texas' bank failures can be blamed on the oil patch, Sexton said. …