Magazine article American Banker

Tese Says Consumer Bank Openings Will Help Push toward Reregulation

Magazine article American Banker

Tese Says Consumer Bank Openings Will Help Push toward Reregulation

Article excerpt

NEW YORK -- The spate of consumer bank openings around the country has served to slow the deregulation movement, according to Vincent Tese, New York superintendent of banks.

Speaking Monday at the New York State Bankers Association's annual convention in Palm Springs, Fla., Mr. Tese said, "In my opinion, the driving force behind the gathering momentum for reregulation, or at the very least the slowing of the deregulation movement, has been the spate of consumer banks organized on an interstate basis by large banking institutions."

Mr. Tese, speaking from a prepared text, said, "The presumed adverse competitive impact of this trend on regional banks has served to consolidate a good deal of grassroots support for restrictive legislation at the congressional level."

Admittedly, he said, some of the reaction against deregulation is "understandable, since we have averaged a bank failure a week over the last eighteen months," as well as "high interest rates, escalating costs to consumers for bank services," and the media attention given to Third World debt-repayment problems.

However, he discounted deregulation as a serious factor in the creation of those problems, citing poor management, the outflow of deposits from banks, unfavorable commodities markets, and the public's lack of confidence in the traditional banking system.

In New York State, he said, "we continue to feel that the competitive situation is such that the financial services industry should not be segmented and that increased competition best serves the consumers of banking services."

He said he believes the state banking department can insure consumer protection and benefits in a deregulated environment, pointing to the department's efforts in drafting regulations to minimize branch closings and to develop a proposal for low-cost "lifeline" banking services for lower-income consumers. …

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