Magazine article American Banker

Kennedy Wants U.S. to Get a Portion of the Proceeds from Mutual Conversions

Magazine article American Banker

Kennedy Wants U.S. to Get a Portion of the Proceeds from Mutual Conversions

Article excerpt

WASHINGTON -- A House Banking committee member is advocating that some proceeds from mutual thrifts' stock conversions go to the government.

Rep. Joseph P. Kennedy 2d, D-Mass., will push for a new provision in a bill the panel's subcommittee on financial institutions is considering, a subcommittee staffer said.

That bill would require the Federal Deposit Insurance Corp., the primary federal regulator for state-chartered savings banks, to adopt the Office of Thrift Supervision's more stringent standards for conversions.

Rep. Kennedy has not decided exactly how he would change the bill, or whether the proceeds should go to deposit insurance funds or thrifts' communities, the staffer said.

But, the staff member said, "one of the more workable alternatives" is having mutuals issue some of their stock rights to the government, an idea outlined in a Congressional Budget Office report released Monday.

'Inequitable Imposition'

Brian P. Smith, policy director for the Savings and Community Bankers of America, said, "We certainly agree with the analysis in the CBO paper that says the community rights are exceedingly ill-defined."

The trade group also opposes any proceeds going to the insurance funds. "This is an inequitable imposition on one segment of the depository institutions business," Mr. Smith said. "It's a tax on the net worth of the often well-capitalized institutions."

The FDIC said in testimony Friday that if it overhauls conversion regulations to require thrifts to issue transferable stock rights, some rights can go to charity or to community groups with depositors' approval. …

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