California Interstate Bill Moves out of Committee to Assembly

By Hooper, Molly | American Banker, May 23, 1985 | Go to article overview

California Interstate Bill Moves out of Committee to Assembly


Hooper, Molly, American Banker


SAN FRANCISCO -- Over the objections of the California Bankers Association, an interstate banking bill has cleared the state Assembly's finance and insurance committee.

Assembly Bill 1492, written by Assemblyman Charles Calderon, chairman of the subcommittee on interstate banking, is backed by New York bank holding companies Citicorp and Chase Manhattan Corp. It is the first California interstate banking proposal to come out of committee since the question was first raised in the Legislature in 1979.

The bill would authorize an out-of-state bank holding company to acquire a California bank after Jan. 1, 1987, provided the California bank is state chartered, has been in operation for at least three years, has assets of no more than $200 million, and has the approval of California's superintendent of banks to be acquired. In addition, the buyer must come from a state that allows bank purchases by California bank holding companies.

While the California Bankers Association supports interstate banking in principle, it is backing an initial regional approach that would first allow reciprocal banking privileges within the 12th Federal Reserve District states of Washington, Oregon, California, Nevada, Utah, Idaho, and Arizona.

While the association has indicated it would be ready to support full nationwide interstate banking in California by 1991, for the time being it has not proposed a trigger date and has stated that Congress should determine which mechanisms best implement interstate banking.

Association Committee Appointed

However, pressed by last week's vote and the possibility that an interstate banking bill might clear the Legislature this year, the association this week appointed a five-man committee to discuss and negotiate legislative options.

Currently, under the Douglas Amendment of the Bank Holding Company Act, interstate banking by bank holding companies is prohibited unless "expressly authorized" by the state into which the firm is entering. In addition, the 1927 McFadden Act prohibits national banks from branching across state lines. Several groups of states, however, have formed compacts to foster interstate banking within confined regions. The U.S. Supreme Court is currently reviewing the legality of those compacts.

While the California Bankers Association has tagged the Calderon bill "the ultimate cherry-picking approach to interstate banking," Mr. Calderon described the association's opposition as "strictly a turf fight" over California's growth economy.

"Interstate banking is already here, and the state is not doing anything to regulate it," Mr. Calderon said. Noting that Citicorp already has an estimated 3,000 employees in the state through various subsidiaries such as its Oakland-based savings bank as well as representative and Edge Act offices, Mr. …

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