Printer Friendly

IBAA WARNS CONGRESS ABOUT DANGERS OF INTERSTATE BANKING AND BRANCHING

 WASHINGTON, July 29 /PRNewswire/ -- A headlong rush into the world of unlimited interstate banking and branching would cause irreparable harm to the nation's communities and consumers, the Independent Bankers Association of America (IBAA) today told Congress. Mandatory interstate banking and branching would result in unfair competition, increased financial concentration, decreased credit availability and less local control over the financial system.
 "Our opposition is not based on fears of fair competition," IBAA President James R. Lauffer told a House Banking subcommittee. "In fact, many of our members successfully compete against branches of large banks. Those branches often offer poorer service and less favorable rates and terms to consumers and businesses."
 But in the long run, Lauffer said, interstate banking and branching would give larger banks a decisive advantage over community banks. The major banking institutions that seek this legislation are too-big-to- fail. None of their depositors, insured or uninsured, is in danger of losing money. But in virtually every community bank failure, uninsured depositors take a hit.
 "Inevitably, uninsured depositors in other banks will come to realize that they face greater risks in community banks," said Lauffer, chairman/president/CEO of First National Bank of Herminie, Irwin, Pa. "They will move their funds out of community banks and into too-big-to- fail banks or into what they hope will be higher-yielding securities and mutual funds."
 Lauffer said larger banks already have an advantage in dealing with the ever-increasing regulatory burden. They can assign specialists to regulatory compliance, while community bank staffs must wear many hats. Lauffer urged Congress to lift the regulatory burden and allow community banks to devote more time to customer service and business development.
 Instead of fostering competition, unfettered branching would increase financial concentration and risk to the system, Lauffer said. In an environment of decreased competition, small businesses would suffer, since larger banks don't find it economical to make small business loans.
 "As the nation's banking system becomes increasingly dominated by the really large banks, where will those smaller borrowers turn for credit?" Lauffer said. "They could face a permanent credit crunch. As we have learned over the last few years, less credit for small business means slower job creation."
 Lauffer also said mandatory interstate banking and branching would lessen local control over banking resources, transferring economic control to distant headquarters and political control to federal agencies.
 Most interstate banking and branching proposals purport to give states the ability to "opt out" of the federal mandates within a fixed time frame, Lauffer said. The limited window of opportunity puts a heavy burden on opponents of the legislation. "Supporters of interstate branching could simply dig in their heels for a brief period and the game would be over," he said.
 IBAA is the only national trade association that exclusively represents the interests of the nation's community banks.
 -0- 7/29/93
 /CONTACT: Ken Guenther or Steve Verdier of the Independent Bankers Association of America, 202-659-8111/


CO: Independent Bankers Association of America ST: District of Columbia IN: FIN SU:

DC-KD -- DC016 -- 7278 07/29/93 14:03 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jul 29, 1993
Words:508
Previous Article:NIGA CHAIR CALLS HOUSE SUPPORTERS OF INDIAN GAMING 'CHAMPIONS OF TRIBAL SOVEREIGNTY AND SELF-SUFFICIENCY'
Next Article:VIRGINIA POWER CUSTOMERS SET THIRD DEMAND RECORD THIS MONTH
Topics:

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters