Abstract: Ah, January! The last of the egg has been slurped, the is kindling, the champagne bottles of New Year's Eve have been plunked in the recycling bin, and, at least in years past, the umpteenth and ultimate showing of a Wonderful Life is history for another season. Unless you ignore television, you must know the premise of director Frank Capra's Christmasstime classic by now. Virtuous Bailey, building-and-loan executive, struggles against the evil Potter, the skinflint banker and owner of most everything else in town too. Now, in real life, the heroes and villains of finance are a lot harder to discern, and if wheels set in motion by the last-minute banking law of the last Congress keep moving, you won't even be able to tell the George Baileys and the Mr. Potters of the country apart, at least not by charter, because they will share the same charter. Why now? One of the stipulations of the budget law signed last September (Economic Growth and Regulatory Paperwork Reduction Act) was that banks share in the final cleanup of the savings and loan industry. A corollary to that provision was that the Bank Insurance Fund and the Savings Association Insurance Fund would be merged by Jan. 1, 1999 if the federal charter ceased to exist as such. When combined with the push for financial modernization promised by congressional leaders, the quest for a merged charter begins to hold out promise for what, on paper at least, would be legislation of historic proportions. Lines of demarcation that virtually every working banker grew up with could be erased. The competitive picture, already smudged, amended, and adjusted by bits of law, rule, court decision, institutional audacity, and more, would be officially changed. Merging the charters, in simple terms, could be as easy as turning all federal savings institutions into national banks. But they come with much baggage -- activities, subsidiaries, and affiliates among them -- that banks can't have, at least not without pretzel-like machinations. One Washington attorney's listing of issues that would have to be addressed in such a scenario fills several pages of small type. Letting all national banks take on the powers of the federal charter is another possibility, but that begs other issues. Brave new charter? Then there is the possibility that some new kind of charter could emerge from the congressional debate, according to the ABA. Such a charter could include abilities neither banks nor thrifts have had before at the federal level. Also lurking within the merger debate, because of the unusual nature of unitary thrift holding companies, is the issue of the appropriateness of connections between banking and commerce. Further, says ABA, there is nothing to stop Congress from creating several options out of the mix of proposals that will emerge as charter-merging is kicked around. Rather than be given a single choice, banks and thrifts may find themselves perusing a menu. One framework that some say could find backers is a two-tier system of community-oriented institutions and huge financial combines, similar in principle to the structure of clearing banks and building societies that Britain maintains. Or, bankers could find themselves stymied. It's not impossible, says KPMG Peat Marwick's Steve Roberts, head of the firm's Washington regulatory practice, that the resulting charter would basically be a bank charter as it is known today. Thrifts might have their extra powers grandfathered, or they might be given a time period to divest them. A rush without pressure The deadline of Jan. 1, 1999, is somewhat bogus, some experienced Washington observers point out. Nothing turns into a pumpkin if the insurance funds don't merge by that date, so there is no legal pressure to merge the charters by then. The 1996 legislation sets a time line with no consequences, says Thomas Vartanian, an attorney with Fried, Frank, Harris, Shriver a Jacobson, Washington, D. …
Publication Year: 1997
Publication Date: 1997-01-01
Language: en
Type: article
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