Magazine article American Banker

Interstate Banking a Reagan Priority

Magazine article American Banker

Interstate Banking a Reagan Priority

Article excerpt

Ronald Reagan didn't invent deregulation, but his administration has carried its banner with genuine fervor. Few issues offer better evidence of that than interstate banking.

"It is time to move toward true interstate banking," Mr. Reagan said in his Economic Report of the President, released earlier this month. And judging by the activity around the country on the legislative and merger front, that time may be nearing.

Of course, most of the action is still concentrated on the regional level. State legislatures around the country -- some having taken up issues such as branch banking and the formation of multibank holding companies only in the last few years -- are now grappling with how to placate the forces pushing for interstate acquisitions.

The President's report, prepared by his Council of Economic Advisers, sees barriers to interstate banking as preventing commercial banks from serving agricultural borrowers as well as they could. It also suggests that "large interstate banks could diversify mortgage-lending risks by holding portfolios of mortgages on properties across the country."

As Congress ponders what, if any, action it will take on interstate banking, a lot of jousting is taking place in regions such as the Midwest (see adjoining box). Similar scenarios may be in the offing before long in states that have so far proven resistant to interstate banking. Legislatures in several states are already hearing the drumbeats. Some highlights:

Iowa: Troubles at several of the state's largest banking companies have increased pressure for interstate legislation that would allow out-of-state companies to come in. …

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