Magazine article American Banker

What the Branching Legislation Will Do

Magazine article American Banker

What the Branching Legislation Will Do

Article excerpt

WASHINGTON --- Tuesday's Senate vote means fidl nationwide interstate branching is less than three years away. Here's a summary of what the bill does:

Interstate banking: There is a distint:lion between interstate branching and interstate banking, and the bill deals with both. One year after President Clinton signs the bill, interstate banking takes effect, Fernfitting bank holding companies to buy banks in any state. States do not have the right to "opt out" of interstate banking.

Branching: As of July 1, 1997, banks can merge with banks in any other state, provided the state has not "opted out," or declined to participate in branching. Branching permits interstate organizations like NationsBank to consolidate their organizations into a single bank.

De novo branching: Banks can establish branches in states where they do not own a deposit taking institution, but only if the state specifically authorizes de novo branching.

Community reinvestment: National bank branches are subject to state laws in the areas of community reinvestment, consumer protection, fair lending, and intrastate branching.

Federal preemption of state laws: The federal banking agencies are required to publish and accept comments on the rules that would have the effect of preempting any state law. Although the measure does not bar agencies from preempting laws, lawmakers expccl it will limit such actions. The measure is aimed primarily at the Comptroller of the Currency, which recently preempted a New Jersey basic banking law. …

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