What's at Stake with Unitary Thrifts
1997; American Bankers Association; Volume: 89; Issue: 10 Linguagem: Inglês
ISSN
0194-5947
Autores Tópico(s)Economic Theory and Policy
ResumoUnitary thrift holding companies are corporations--financial or nonfinancial in nature--that own a single savings bank or savings association (or a portion of one, in many cases). Under current law, any company can acquire a single thrift. Unitary thrifts represent the main avenue for commercial companies into banking services, though many firms offer lending and related services without owning a bank or a thrift. a practical matter, a thrift can compete directly with community banks in almost every respect, ABA states. Indeed, in a controversial open letter to community bankers that House Banking Committee Chairman Jim Leach (R.-Iowa) released after passage of the H.R. 10 financial modernization package, Leach put the unitary thrift issue into chilling perspective: The unitary thrift issue must be understood in the context of the commerce and banking provisions of the bill. While the bill contains a breach in commerce and banking, about which I am most perplexed, the 15% basket approach provided for ... must be compared with the continued proliferation of unitary thrift holding companies ... which have no percentage restrictions on banking and commerce. Many commercial companies, particularly insurance and securities firms, are looking to the thrift charter with its broader preemption rights of state branching and consumer laws a preferred way of getting into the business of bank modernization legislation is not passed not only will community banks fail to receive the new powers hue the unitary model will be used by hundreds, more probably thousands, of new commercial entrants into the field of banking. As of the end of 1996, there were 704 unitary thrift holding companies, according to the Office of Thrift Supervision (OTS). Many don't engage in nonfinancial activities, though they can, under current law. Centralized, public information on their nonbanking activities is often sketchy, however, OTS pointed out in a spring 1997 background paper that the range of unitary thrift holding companies includes those that concentrate on their thrift, diversified multi-billion dollar parents, and numerous mid-sized companies that engage in a few select activities. ABA research indicates that 35 unitary thrift holding companies engage in nonfinancial commercial activities barred to bank holding All 35, plus 72 more, are engaged in financial activities barred to bank holding companies by the Federal Reserve (excluding some grandfathered activities; see the accompanying tables). This is only the tip of the iceberg, ABA observes, as there are no limits on the ability to create new, de novo unitary thrift holding companies. As if to underscore this point, State Insurance Co. filed for a thrift charter in June, in order to offer consumer loans well deposit accounts. Initially service would be provided in three states, though some deposit services would be offered nationally. Typically, local State agents would sell the proposed thrift's products. State was the fourth large insurer to seek a thrift charter in recent months--the others are Travelers Group, Principal Financial Group, and TransAmerica Corp. Later in the summer, the National Association of Mutual Insurance Companies announced intentions to charter a federal thrift--NAMIC Bank SA--to facilitate member lending to policyholders. Add such new entrants to the partial list of applicants for unitary thrift charters contained in the nearby table and then add them to the total of existing unitary thrifts (in the industry snapshot tables) and you can begin to see the scope of the problem. As ABA points out, the hundreds of independent thrifts could easily be turned into unitary thrift holding If no legislation is enacted that limits the unitary thrift a vehicle for mixing banking and commerce, there will be nothing to prevent such companies Blockbuster Video, K-Mart, or John Deere from following the lead of State Farm and others. …
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