Magazine article American Banker

Fed Demands a Say in Mellon's NJ Deal

Magazine article American Banker

Fed Demands a Say in Mellon's NJ Deal

Article excerpt

WASHINGTON -- A proposed interstate acquisition by Mellon National Corp. ran into a possible roadblock Tuesday when the Federal Reserve Board said it must clear the transaction.

Pittsburg-based Mellon is attempting to acquire Heritage Bancorp Inc. of Jamesburg, N.J., under an arrangement whereby Mellon's Philadelphia subsidiary, Girard Bank, first would be merged with Heritage Bank NA. Because the New Jersey institution has operated a branch in Philadelphia since 1813, Mellon contends that the merger would not violate interstate banking limits that came into being with the 1927 McFadden Act.

Mellon also contends that because the transaction involves a merger of two national banks, it should be subject to the approval of the Comptroller of the Currency and not the Fed.

But the proposal has been criticized by banking commissoners Michael M. Horn of New Jersey and Ben McEnteer of Pennsylvania. Mr. Horn has stated that the plan primarily would be a holding company acquisition, and that it would violate Federal curbs on interstate holding company operations and New Jersey law.

Mr. McEnteer said his concern was that state and federal officials arrive at "equitable and well-structured" methods for implementing interstate banking.

Both state commissioners in December asked the Fed, as the regulator of bank holding companies, to intervene.

On Tuesday, the Fed told Mellon that to complete the transaction it must file an application with the Fed under the Bank Holding Company Act. …

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