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CSBS/IBAA SUE OTS ON INTERSTATE BRANCHING RULE

 CSBS/IBAA SUE OTS ON INTERSTATE BRANCHING RULE
 WASHINGTON, May 4 /PRNewswire/ -- The Conference of State Bank


Supervisors (CSBS) and the Independent Bankers Association of America (IBAA) filed suit against the Office of Thrift Supervision (OTS) challenging the OTS rule allowing interstate branching by savings and loan associations and federal savings banks.
 The lawsuit was filed late Friday in the U.S. District Court of the District of Columbia and seeks to obtain a declaratory judgment and injunctions to prohibit the OTS from enforcing its rule to allow interstate branching by thrifts.
 "By allowing interstate branching by thrifts, the OTS has created a grossly inequitable situation between banks and thrifts," said CSBS Chairman Margie Muller, bank commissioner, state of Maryland. "This continues a trend of regulatory favoritism toward thrifts which largely disregards the possible effects upon the well being of local economies and the unique roles played by the different components of the country's financial services industry."
 "The OTS scheme to permit nationwide interstate branching for thrifts by regulatory fiat subverts the legal right of individual states to determine the type of financial structure that best meets their diverse needs," said IBAA President Bob Hawkins, chairman of the Southern Commercial Bank in St. Louis. "It attempts to do administratively what was rejected by Congress last year. Permitting thrifts to branch into unknown and thus more risky markets, could lead to additional taxpayer losses."
 CSBS and IBAA said that the OTS rule is contrary to the clearly expressed will of Congress, lacks a reasoned basis, is arbitrary and capricious and violates federal procedural acts:
 -- Congress has repeatedly rejected proposals that would permit interstate branching by financial institutions. By implementing administratively what Congress has refused to permit by statute, OTS has violated the will of Congress.
 -- The OTS failed to comply with requirements of the Administrative Procedure Act by adding to the rule an arbitrary and capricious provision regarding federal preemption of state law, CSBS and IBAA said. Since this provision was not found in the original OTS proposal, it is not a logical outgrowth of the proposal.
 -- Without supplying proper analysis, the OTS concluded that its thrift branching rule would not have a significant economic impact on a substantial number of small businesses. In failing to support its conclusion, the OTS failed to follow the requirements of the Regulatory Flexibility Act.
 In addition, CSBS and IBAA said the OTS rule was not supported by the OTS rulemaking record; did not explain the OTS's reversal of long-standing policy; and was promulgated without considering evidence acquired by OTS subsequent to the close of the comment period.
 Shortly after the OTS announced its rule, 25 senators and several representatives wrote to the OTS opposing the rule and asking that the agency give interested parties additional time to comment. Both the IBAA and CSBS comment letters made similar requests. Unfortunately, the OTS chose to ignore these requests. In response, Sens. Wendell Ford (D-Ky.) and Dale Bumpers (D-Ark.) and Rep. Bill Sarpalius (D-Texas) have introduced legislation that would reverse this ruling. The House Banking Committee has just begun to hold hearings on the issue.
 The Conference of State Bank Supervisors, is the professional organization of the 54 state officials who charter, supervise and regulate banks and other financial institutions. Founded in 1902, CSBS is the only national organization dedicated to promoting state banking interests and the dual banking system in the Congress, the courts and with the federal regulatory agencies.
 The Independent Bankers Association of America is the only national trade association which exclusively represents the interests of the nation's community banks.
 -0- 5/4/92
 /CONTACT: Diane Helyne Zyats of the Conference of State Bank Supervisors, 202-728-5725; or Steve Verdier of the Independent Bankers Association of America, 202-659-8111/ CO: Independent Bankers Association of America; Conference of State
 Bank Supervisors; Office of Thrift Supervision ST: District of Columbia IN: FIN SU:


MH -- DC007 -- 5986 05/04/92 11:30 EDT
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Date:May 4, 1992
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