Magazine article American Banker

OCC Ruling in Kansas Could Put Damper on Opt-Out Movement

Magazine article American Banker

OCC Ruling in Kansas Could Put Damper on Opt-Out Movement

Article excerpt

WASHINGTON - In a potential challenge to states that are considering "opting out" of interstate branching, federal regulators said Wednesday they will approve the creation of a multistate bank in a state which bars the practice.

Overriding the strenuous objections of Kansas bank regulators, the Comptroller's office allowed Lenexa-based Bank Midwest of Kansas to move its main office across state lines in a merger with Bank Midwest, its sister institution in Kansas City, Mo.

As part of its approval, the Comptroller's office for the first time asserted that a state's restrictions on out-of-state banks owning branches violates the Constitution's commerce clause.

"By hook or by crook, Comptroller [Eugene A.] Ludwig is aggressively pushing interstate banking and branching," said Kenneth Guenther, executive vice president of the Independent Bankers Association of America.

The Conference of State Bank Supervisors also protested the decision, which would allow the formation of a $991 million-asset institution called Bank Midwest. The banks are subsidiaries of Dickinson Financial Corp.

"It does seriously undercut some of the state jurisdiction and also jumps the gun" on the interstate branching law passed last year, said Robert A. Richard, vice president for regulatory services at the state regulators group.

Mr. Guenther said that because that law gives states until June, 1997 to opt out of interstate branching, the Comptroller's office "is doing by regulatory fiat what the Congress clearly left for the states. …

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