Magazine article American Banker

Angell Sees Many Hurdles to Interstate Banking Law

Magazine article American Banker

Angell Sees Many Hurdles to Interstate Banking Law

Article excerpt

NEW ORLEANS -- Congress is not likely to pass legislation this year permitting interstate banking, Federal Reserve Board Governor Wayne Angell said at the American Economics Association conference here.

"It's very difficult to correct the forces" that resulted in the failure to include interstate banking in the 1991 bank legislation, Mr. Angell said.

The politics of the issue hurt the effort, giving "too many congressmen too many reasons" to feel safer politically by voting against it, the Fed governor said Saturday in a panel discussion on bank regulation.

Scrapping Too-Big-To-Fail

He favors interstate banking only if it is allowed "on a level playing field," which would include ending the Fed's too-big-to-fail policy.

"I'm for getting rid of too-big-to-fail, but it would be a disaster right now because too many big banks are close to failure," he said.

Mr. Angell said regulators have no methods to stop large, troubled banks from making dividend payments to stockholders, or for asking such banks to issue more stock to meet capital requirements. He called the situation "appalling."

He also said regulators and Bush administration officials are not concerned enough about enforcing antimonopoly laws against both large and small banks. A more equitable policy would help create the appearance "that we really do want a level playing field."

Even if Congress is slow to act, Mr. Angell said, changes could come in piecemeal fashion, such as through recent proposals by the Office of Thrift Supervision to make it easy for savings and loan to cross state lines. …

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