Magazine article American Banker

First Chicago Chairman Says Drive for Consumer Banks Is a 'Disgrace.' (Barry L. Sullivan)

Magazine article American Banker

First Chicago Chairman Says Drive for Consumer Banks Is a 'Disgrace.' (Barry L. Sullivan)

Article excerpt

NEW ORLEANS -- The spate of applications for consumer banks is a "disgrace" and a "perversion of federal regulations" caused by federal inaction, the chairman of First Chicago Corp. told bankers here Monday.

Speaking in a crowded auditorium at the Accounting and Finance Conference of the Bank Administration Institute, Barry L. Sullivan also warned that leveraged buyouts would cause the next round of "systematic" loan problems for banks and that those problems might start within the year.

Despite his harsh words on the boom in consumer bank applications, Mr. Sullivan told the group that opening such a bank, whether "disgraceful or not," is an "appropriate" action for a major bank holding company, which has to "answer to several constituencies" such as shareholders and customers.

First Chicago announced Friday that it would seek to open "operating banks," its variation on consumer banks, in California, Texas, New York, New Jersey, and Georgia.

In the past few weeks, more than 30 bank holding companies have applied for charters with the Office of the Comptroller of the Currency to open more than 200 out-of-state "consumer banks," which will be able to perform consumer business such as taking deposits and making consumer loans but will not make commercial loans.

Mr. Sullivan said the consumer banks provided an acceptable way for banks to conduct interstate business because he does not "believe that national geographic regulation will happen very quickly." Regional legislation, however, is closer, he said. …

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