Lawyers Grapple with Age of Interstate Banking

By Schulz, Matt | American Banker, September 21, 1995 | Go to article overview

Lawyers Grapple with Age of Interstate Banking


Schulz, Matt, American Banker


Most of the more than 50 compliance lawyers who converged here last week on The Breakers, a steamy oceanside resort, wore bright clothing instead of business suits. But the issues contemplated during the three-day seminar put on by CFI Proservices were anything but casual.

Hot topics included figuring how states will react to the Riegle-Neal Interstate Banking and Branching Efficiency Act; whether a bank's internal evaluation of its compliance performance is protected; and how the Community Reinvestment Act should apply to Native American reservations. CFI Proservices, based in Portland, Ore., is a compliance software company that keeps up with state regulatory changes through a network of lawyers in all 50 states.

President Robert P. Chamness, himself a lawyer, said CFI's network of lawyers gives it an edge in the industry by keeping the company abreast of impending regulatory changes.

The Riegle-Neal law enacted last year dominated many of the sessions as states prepare for the Sept. 29 onset of interstate banking. Interstate branching becomes legal June 1, 1997.

Reaction to the act proved to be anything but uniform.

Attorneys from Pennsylvania and Oregon said their state would "opt in" and allow out-of-state banks to branch into their states before June 1997. Dan Nicewander, a lawyer with Gardere, Wynne in Houston, said Texas would opt out of interstate banking. Other states weren't quite as cut-and-dry in response.

For example, Richard Olson, a lawyer with Olson, Burns, Lee & Larson of Minot, N.D., said interstate banking in his state was prohibited by statute and would be phased in slowly. No changes will be seen until August 1996, when banks will be able to move freely throughout the state. In May 1997, the state will allow out- of-state banks to enter.

Montana has accepted interstate banking but will not let out-of- state banks establish branches within the state.

Colorado will allow expansion into the state in June 1997, but acquirers must buy the whole bank, not just a branch or two.

***

Defining a bank's "location" and what amounts to "interest" - crucial terms in interstate banking - caused much debate at the conference. "Interest" ought to be interpreted broadly to include all bank charges, including credit card late charges, said Alan Kaplinsky, a lawyer with Ballard, Spahr, Andrews, & Ingersoll in Philadelphia. National banks want the flexibility to charge fees allowed in the state where they are headquartered, where a branch is located, or where a service is provided. …

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