State Interstate Banking Law Gets Attention of Neighbors / in Texas, Louisiana

By Wolfe, Lou Anne | THE JOURNAL RECORD, June 14, 1986 | Go to article overview

State Interstate Banking Law Gets Attention of Neighbors / in Texas, Louisiana


Wolfe, Lou Anne, THE JOURNAL RECORD


Not so very long ago, Oklahoma was viewed by some as a "holdout" state on the matter of interstate banking.

So it's no surprise that the state's rapidly-passed interstate law has caught the attention of neighboring Texas and Louisiana.

While bank officials in both states stop short of admitting that the Oklahoma law served as an example to follow, Louisiana should have a regional interstate law when the state legislature adjournsthis July.

And Texas lawmakers are getting their ducks in a row for the convention of that state's biannual legislature in January.

Two states contiguous to Oklahoma have passed interstate measures.

New Mexico enacted a law in February allowing out-of-state banks to buy failed banks, if no in-state buyer is found.

Missouri passed an eight-state regional-reciprocal law, effective Aug. 13, which includes Oklahoma.

Colorado, Kansas, and Arkansas have no interstate laws. Measures were introduced and defeated in Colorado and Arkansas in 1985, but nothing has been introduced in Kansas.

In May, the banking committees from the Texas State Senate and House of Representatives met jointly, out of session, to discuss banking issues.

Although separate meetings of the committees were not uncommon in the past, Texas Bank Commissioner James Sexton said he could not remember a joint meeting ever occurring.

Anticipated action at the federal level, along with Oklahoma's sudden acceptance of interstate banking, have made it an issue that can't be ignored, he said.

"The Senate and House are studying the issue already," he said. "They want to have a handle on the issues before the legislature opens up, and they want to know the direction they want to go."

Congress is expected to consider a proposal this year that would provide for interstate acquisition of failed or failing banks with assets of $250 million or greater. In May, Oklahoma passed a lawproviding for emergency interstate acquisition of failed or failing banks, effective immediately.

The Oklahoma law calls for full interstate banking as of July 1, 1987. Called a "modified reciprocal" measure by Oklahoma Bankers Association executive Robert Harris, entering bank companies will be unable to expand in the state unless their home state has passed interstate legislation including Oklahoma.

Absent reciprocal legislation, the entering bank company must wait four years to expand after its initial acquisition in Oklahoma.

While the Texas legislators found Oklahoma's law "interesting and unique," the most Sexton expects this time around would be a regional-reciprocal bill. And he doubts the state will go for an emergency measure for failed banks.

"It all depends on perception and local need," Sexton said. "You don't give up your interstate protections cheaply."

Noting that several Texas bank holding companies have supported regional-reciprocal legislation in the past, he said there appears to be sympathy for that proposal.

"But there's also a strong opposing side, that says "we're doing fine here and we don't want anyone to come in'," he said.

A regional-reciprocal bill was introduced once before, in January 1985, but never made it out of committee, Sexton said.

Sam Kimberlin, executive vice president of the Texas Bankers Association, said the passage of Oklahoma's bill, combined with expected passage of a regional bill by Louisiana, should add some impetus for a regional compact.

Noting that Louisiana, Oklahoma and Texas have close relationships between their people and their banks, he said he would expect Louisiana and Oklahoma to be included in the region.

Texas has 1,970 banks. Of those, 14 have assets greater than $1 billion, and nine holding companies have assets of more than $2.5 billion.

Republic Bank Corp. of Dallas, with assets of $23.2 billion, is the state's largest holding company. …

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