Magazine article American Banker

The Lobbyists: Zions' Stock Investment Is Riding on Relief Bill

Magazine article American Banker

The Lobbyists: Zions' Stock Investment Is Riding on Relief Bill

Article excerpt

Zions First National Bank is counting on a seven-line passage in pending regulatory relief legislation to protect a multimillion-dollar investment.

Urged by Salt Lake City-based Zions, Sen. Robert F. Bennett, R-Utah, included the provision in the deregulation bill that the Senate Banking Committee approved last week. Though Zions is not mentioned by name, the amendment was tailored to prevent the bank from having to divest a large portion of its 32% stake in the class A common stock of the Federal Agricultural Mortgage Corp.

Similar language was included in the House version sponsored by Rep. Marge Roukema, R-N.J., that the Banking Committe approved Tuesday.

Zions' holdings are threatened by a provision in the 1996 thrift bailout law that banned federal depository institutions from affiliating with government-sponsored enterprises. It was designed to stop a group of Farm Credit System banks in Wisconsin from forming a credit union, but the Federal Reserve Board is applying the provision to Zions' stake in Farmer Mac. Zions is the largest shareholder of Farmer Mac's class A stock and the only bank affected by the prohibition.

W. David Hemingway, executive vice president of Zions, said the bank bought 320,000 of Farmer Mac's class A common shares in April 1996 for $8 apiece. At Monday's closing price of $19.75, the value of Zions' holdings has more than doubled, to $6.4 million.

But according to the Fed, Zions is violating the 1996 law unless it scales back its investment to less than 25%, or roughly 253,000 shares.

"We are happy with our investment," Mr. Hemingway said. "We asked that we be grandfathered because we owned it before the law was passed."

The banking lobby is still smarting from its loss on the credit union bill, which would ease membership limits on the nonprofit institutions. The House on Tuesday approved the Senate version, teeing it up for the President's signature. …

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