Fed Allows Bank Holding Companies to Link Units' Services for Pricing
Seiberg, Jaret, American Banker
WASHINGTON -- The Federal Reserve Board voted Wednesday to make it easier for bank holding companies to offer discounts to customers who use a variety of their services.
The board unanimously approved a change to Regulation Y that will allow holding companies in many cases to tie together for pricing purposes the various products offered by all affiliates, including brokerage services.
The change becomes effective 30 days after its publication in the Federal Register.
The Fed, however, didn't remove all discounting restrictions. The new rules require a customer to maintain a traditional banking service - defined as either a loan, deposit, or trust - at an affiliate before qualifying for discounted services.
"We consider it significant," James D. McLaughlin, director of agency relations at the American Bankers Association. "But we are a bit disappointed it didn't go as far as it could have gone."
Mr. McLaughlin said the ABA wanted the Fed to allow banks to offer discounts on traditional services to customers with brokerage accounts.
He said securities dealers such as Merrill Lynch & Co., which operates a state-chartered bank in New Jersey, currently have this ability.
"That's what's unfair about this," Mr. McLaughlin said.
Nonbank Services Proposal
The Fed did take a small step toward freeing the banks. It agreed to publish for public comment a proposal to allow holding companies to tie together services at nonbank affiliates. …