OCC's Paperwork Rewrite Paves the Way for Banks to Expand Their Powers
Garsson, Robert M., American Banker
It's anybody's bet whether Congress will overhaul the Glass-Steagall Act this year. But no matter what happens on Capitol Hill, Comptroller of the Currency Eugene A. Ludwig is charging ahead with a proposal of his own that could pave the way for a significant expansion of national bank powers.
Mr. Ludwig is undertaking a broad rewrite of rules on corporate applications and notices. For national banks, the regulations promise a reduction in paperwork and streamlined procedures for applications.
State banks might also benefit through "wild card" laws that give them the same powers as national banks.
Under the comptroller's proposal, national banks would no longer need file applications for many corporate activities, such as opening or relocating branches. Instead, they could simply file notice with the Comptroller's office and proceed if the agency does not object.
The difference is more than semantic. Applications subject to approvals can hang for months and even years before a regulator gets around to rendering a decision. The notice procedure, by contrast, provides a date certain.
"The industry has to go hat in hand to the regulators everytime they want to do something" under" the existing system, said James McLaughlin, director of agency relations for the American Bankers Association. "So this helps a lot."
But while paperwork reduction appeals to banks of all shapes and sizes, it is the prospect of new powers in the Comptroller's initiative that has the industry buzzing.
That's because the rules would confer a new status on operating subsidiaries. At present, operating subsidiaries are permitted to engage in powers incidental to banking only if the activities are permissible for the parent bank.
The pending "op-sub" rules would permit the units to engage in powers incidental to banking, without regard to many of the legal restrictions that bind banks, such as the Glass-Steagall Act's ban on investment banking.
That's not to say that the rules would immediately free banks to underwrite a full range of securities through their operating subsidiaries. …