Academic journal article ABA Banking Journal

The 'Next Credit Union' or 'Future Curiosity?'(unitary Thrifts)

Academic journal article ABA Banking Journal

The 'Next Credit Union' or 'Future Curiosity?'(unitary Thrifts)

Article excerpt

If credit-union competitors give you stomach pains, unbridled competition from "unitary thrifts" could give you apoplexy.

Unitary thrifts are companies, in a myriad of businesses, which include a savings institution among their holdings. Under current law, any company can acquire or charter a single thrift. (There are more than 700 of them, although only a fraction currently represent a significant blending of banking and commerce, according to ABA research.)

The original cornerstone of the current financial modernization debate -- merger of the federal banking and thrift charters -- brought these institutions under congressional scrutiny.

The ability to set up the unitary thrift structure has been around for ages. What's new is that the concept has begun to catch like flame in a fuel dump. The Office of Thrift Supervision, in the name of housing, has demonstrated willingness to charter new thrifts for inclusion in unitary thrift holding company structures -- albeit with the requirement that they protect consumer privacy and establish means of meeting community credit needs -- and there are many thrifts around the country that represent ready. avenues into banking services for financially inclined commercial firms. (Both the House Banking and House Commerce versions of H.R. 10 would halt further sales of thrifts to commercial firms.)

In the absence of any legislation this year dealing with financial modernization, the newly awakened appetite for unitary thrift expansion will be unchecked.

Indeed, the head of a thrift trade group has been quoted as stating that legislation such as either version of H.R. 10, which would halt expansion of unitary thrifts, would reduce this portion of the financial industry to the status of "lepers" in a small universe that cannot be expanded" -- turning a threat to banks into a financial curiosity. …

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