Community Bankers May Seek Full Interstate Banking Repeal / Harris `Shocked, Appalled'

By Wolfe, Lou Anne | THE JOURNAL RECORD, June 17, 1986 | Go to article overview

Community Bankers May Seek Full Interstate Banking Repeal / Harris `Shocked, Appalled'


Wolfe, Lou Anne, THE JOURNAL RECORD


A proposal to repeal the 1987 full interstate banking provision in Oklahoma's new interstate banking law will be consid ered by the Community Bankers Association of Oklahoma at a meeting next month, said executive manager James P. McKeown.

And Robert E. Harris, executive vice president of the Oklahoma Bankers Association, said he was "shocked and appalled" by McKeown's statement.

"It was the Community Bankers Association who, during the arguments on interstate, wanted an immediate implementation date," Harris said. "The large banks were arguing for 1989 or later, with exception of First Oklahoma (Bancorporation Inc.) who wanted an earlier date."

McKeown said: "I think the questions we'll be asking are, do we need a 1987 trigger for full interstate banking, and should we possibly put a threshold of $100 million on (interstate acquisition of) failed or failing banks," he said.

Noting the interstate law was passed to avert a crisis situation, McKeown said out-of-state bidders have been noticeably absent in two of three predicted bank failures which were given as reasons for its passage. He declined comment on the third projected failure, which has not occurred.

Tulsa's Bank of Commerce and Trust Co. failed May 8, and the First National Bank and Trust Co. in Tulsa bought its deposits and some assets for a branch. On May 29, the First National Bank and Trust Co. in Norman failed, and basically the same arrangement was made by Liberty National Bank and Trust Co. of Oklahoma City for a branch.

Both First Tulsa and Liberty are subsidiaries of Banks of Mid-America, the largest holding company in Oklahoma.

Bank companies from Kansas and Texas attended a bidders' meeting held by the Federal Deposit Insurance Corp. for the Norman bank, but McKeown said the out-of-state bankers were more interested in seeing how Oklahoma's bidding process works than buying its merchandise.

Since out-of-state banks "did not react to our need and crisis," McKeown said there is no need for wide-open interstate banking that will go into effect just as Oklahoma are getting on their feet again.

The law signed by Gov. George Nigh in May provides for immediate acquisition of failed or failing banks by interstate buyers if no Oklahoma buyer is found, with full interstate banking effective July 1, 1987.

An entering bank will be prohibited from expanding in the state unless its state of origin has passed an interstate law which includes Oklahoma. Absent such legislation, the entering bank would beable to expand after four years.

A threshold would mean the emergency interstate failed or failing legislation could not be used on a bank with assets under $100 million.

Federal law provides for the emergency interstate takeover of banks with assets of $500 million or more, and Congress is expected to modify that amount to $250 million this year.

McKeown said he believes the expanded branching law signed by Nigh this year should take care of the smaller banks' problems, without making them vulnerable to an unwelcome interstate purchase.

The branching bill allows unlimited acquisition of failed or failing Oklahoma banks by other in-state banks, regardless of location.

"It was the branching legislation that allowed Banks of Mid-America to purchase First of Norman," McKeown said. "It might behoove us to consider a threshold to keep interstate banking out of the small bank market. That way, they couldn't make entry in the state by buying a very small bank and capitalizing on our branching laws to expand."

Harris, of the Oklahoma Bankers Association, said McKeown was "seriously misreading" the attitudes of the small bankers in Oklahoma, who would resent being excluded from the opportunities afforded large banks.

For instance, Harris said bankers in Guymon strongly opposed the earlier position taken by the Oklahoma Bankers Association for a $100 million threshold.

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Community Bankers May Seek Full Interstate Banking Repeal / Harris `Shocked, Appalled'
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