Sears Files Suit on Connecticut Banking Law
Fraust, Bart, American Banker
NEW YORK -- Connecticut's banking statute -- under attack by two bank holding companies -- is now the subject of a lawsuit by Sears, Roebuck and Co.
The Chicago-based giant said Monday it has filed a suit challenging the constitutionality of a Connecticut statute restricting the activities of savings and loan holding companies.
Sears is a savings and loan holding company through its ownership of Sears Savings Bank, a Glendale, Calif., thrift that formerly was known as Allstate Savings & Loan Association.
"It is apparent that the purpose of the statute is to restrict interstate commerce and keep out competition," Sears said in a statement.
Brian J. Woolf, Connecticut banking commissioner, said Monday he has referred the matter to the Connecticut attorney general's office for review.
The statute being challenged by Sears is a section of Connecticut's interstate banking law, which limits bank mergers and acquisitions to banking companies from other New England states.
Citicorp and Northeast Bancorp Inc. of New Haven, Conn., are challenging the constitutionally of Connecticut and Massachusetts laws restricting interstate banking activities to New England.
But the Sears lawsuit, which was filed in U.S. District Court in Hartford, Conn., does not concern the section of the law dealing with the New England banking compact.
Instead, Sears is challenging a section of the statute that provides that bank holding companies -- whether from Connecticut or from out of state -- can establish no more than two non-depository offices per year if the offices are judged to be closely related to banking.
The Connecticut banking commissioner decides whether the activities are closely related to banking or "a proper incident" to banking.
Under an amendment enacted in May, the restriction was extended to savings and loan holding companies, again both from Connecticut and from out of state.
Thus, under the statute, the commissioner would have sole discretion to decide whether securities, insurance, or real estate activities are closely related to banking and limit any expansion moves in Connecticut by Sears or any other company. Mr. Woolf said he was not bound by federal definitions of what constitutes an activity closely related to banking. Commerce Clause
The Sears suit argues that the amendment violates the Commerce Clause of the United States Constitution because it restricts depository holding companies located outside of Connecticut from engaging in activities in the state. …