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F ederal Reserve bank of DALLAS, TEXAS Dallas 75222 Circular No. 73-213 August 23, 1973 HEARING ON APPLICATION BY A BANK HOLDING COMPANY TO ACQUIRE A SAVINGS AND LOAN ASSOCIATION To All Banks, Bank Holding Companies and Others Concerned in the Eleventh Federal Reserve District: On August 20, 1973? the Board of Governors of the Federal Reserve System invited comment and ordered a hearing to begin October 30, 1973 on an application by a bank holding company to acquire a savings and loan association. In connection with this application, the Board will also consider whether to add the operation of a savings and loan association to the list of permissible activities for bank holding companies. Requests to testify at the hearing should be received by the Secretary, Board of Governors of the Federal Reserve System no later than October 1, 1973. Statements and comments on the issues will be received by the Board through November 30 , 1973. Attached are copies of the Board's press release and order on this matter. Yours very truly, P. E. Coldwell, President Attachments This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) J FEDERAL For immediate release RESERVE August 20, 1973 The Board of Governors of the Federal Reserve System today invited comment and ordered a hearing to begin October 30 on an application by a bank holding company to acquire a savings and loan association. The activity of operating a savings and loan association has not been determined by the Board to be closely related to banking. Consequently, in connection with this application, the Board will also consider whether to add operation of an S&L to its list of activities that are closely related to banking and permissible for acquisition by a bank holding company, subject to Board approval in individual cases. The applicant in this case, American Fletcher Corporation, Indian apolis, Indiana, is seeking to acquire voting shares of the Southwest Savings and Loan Association, Phoenix, Arizona. Requests to testify at the hearing should be submitted to the Secretary of the Board by October 1. The hearing will be held before available members of the Board commencing at 10:00 a.m. on October 30 at the Board's headquarters, 20th Street and Constitution Avenue, N. W., in Washington, D.C. Statements and comments on the issues will be received by the Board through November 30. In inviting comment and ordering a hearing at this time, the Board hopes to focus public attention on the important issues involved in the possible affiliation of banks and savings and loan associations. Specifically, the Board's action was taken pursuant to a provision of its Regulation Y which - 2 states that any bank holding company may apply to the Board to engage in an activity it believes to be closely related to banking, even though the activity is not included specifically in the Board's list of permissible activities. The Regulation states that applications of this type will be processed under the same procedures that apply to applications to acquire an established concern engaged in a permissible activity that is closely related to banking. The Board took no position on the issues at this time. In addition to inviting comment on the general issue of affiliation of savings and loan associations with bank holding companies, the Board will consider whether certain specific limitations should be imposed upon bank holding companies seeking to enter this field. One possible question to be studied is whether a bank holding company should be permitted to operate both an S&L and a bank in the same geographic market. Another is whether the Board should limit acquisitions of S&Ls to one per bank holding company. The application from American Fletcher may be inspected at the Board in Washington or at any of the Federal Reserve Banks. A copy of the Board's order in this matter is attached. - 0 - FEDERAL RESERVE SYSTEM [1 2 CFR P a r t 225] [R e g . Y] Bank H o ld in g C om panies N o tic e o f A p p l i c a t i o n t o A c q u ire Company E ngaged i n t h e O p e r a tio n o f a S a v in g s and L oan A s s o c i a t i o n and o f P o s s i b l e R u le m a k in g w ith R e s p e c t T h e r e t o , T he B o a rd o f G o v e rn o rs h a s r e c e i v e d t h e f o llo w in g a p p l i c a t i o n f i l e d p u r s u a n t t o § 4 ( c ) ( 8 ) o f t h e B ank H o ld in g Company A c t (12 U .S .C * 1 8 4 3 ( c ) ( 8 ) ) and § 2 2 5 .4 ( b ) ( 2 ) o f t h e B o a r d 's R e g u l a ti o n Y (12 CFR 2 2 5 .4 ( b ) ( 2 ) ) f o r p r i o r a p p r o v a l t o a c q u i r e s h a r e s o f a com pany e n g a g e d i n t h e o p e r a t i o n o f a s a v in g s and lo a n a s s o c i a t i o n : A m e ric a n F l e t c h e r C o r p o r a t i o n , I n d i a n a p o l i s , I n d i a n a , h a s a p p li e d t o a c q u i r e v o t i n g s h a r e s o f S o u th w e s t S a v in g s and L oan A s s o c i a t i o n , P h o e n ix , A r iz o n a . T he a c t i v i t y o f o p e r a t i n g a s a v in g s and lo a n a s s o c i a t i o n h a s n o t h e r e t o f o r e b e e n fo u n d by t h e B o ard t o b e c l o s e l y r e l a t e d t o b a n k in g . A p p lic a n t s t a t e s t h a t t h e p ro p o s e d a c t i v i t y e s s e n t i a l l y in v o lv e s t h e r e c e i p t o f d e p o s i t s and e x t e n s i o n o f c r e d i t , and i s , i n A p p l i c a n t ’ s o p i n io n , c l o s e l y r e l a t e d t o b a n k in g . T he B oard t h e r e f o r e p u b l i s h e s t h i s n o t i c e p u r s u a n t t o s e c t i o n 2 2 5 .4 ( a ) o f R e g u l a ti o n Y . I n c o n n e c tio n w ith t h i s a p p l i c a t i o n , t h e B o ard w i l l a l s o c o n s id e r p o s s i b l e r u le m a k in g t o add t h e p ro p o s e d a c t i v i t y t o t h e l i s t o f a c t i v i t i e s t h e B oard h a s p r e v i o u s l y d e te r m in e d t o b e c l o s e l y r e l a t e d t o b a n k in g . In i t s d e l i b e r a t i o n s on th e a c t i v i t y p ro p o s e d i n t h e p r e s e n t a p p l i c a t i o n and t h e p ro p o s e d ru le m a k in g r e l a t e d t h e r e t o , t h e B oard w i l l a l s o c o n s id e r -2 - p o s s i b l e i m p o s i ti o n o f c e r t a i n r e s t r i c t i o n s and r e q u ir e m e n ts u p o n b a n k h o l d in g com pany e n t r y i n t o t h e p ro p o s e d a c t i v i t y . Among t h e p o s s i b l e r e s t r i c t i o n s and r e q u ir e m e n ts t h e B o ard w i l l c o n s id e r a r e t h a t : 1) t h e p ro p o s e d s u b s i d i a r y may n o t o p e r a t e i n an y g e o g r a p h ic m a rk e t i n w h ic h a n y b a n k in g s u b s i d i a r y o f t h e h o l d in g com pany s y s te m o f w h ic h i t w o u ld b e a m em ber o p e r a t e s a n d 2 ) a b a n k h o ld in g com pany w ould n o t b e p e r m i tt e d t o o p e r a t e m ore t h a n o n e s a v in g s and lo a n a s s o c i a t i o n . I n t e r e s t e d p e r s o n s may e x p r e s s t h e i r v ie w s on t h e q u e s ti o n o f w h e th e r t h e o p e r a t i o n o f a s a v in g s and lo a n a s s o c i a t i o n i s so c l o s e l y r e l a t e d t o b a n k in g o r m an a g in g o r c o n t r o l l i n g b a n k s a s t o b e a p r o p e r i n c i d e n t t h e r e t o , and on t h e r e s t r i c t i o n s w h ic h a r e b e in g c o n s id e r e d i n c o n n e c tio n w i t h t h e p ro p o s e d a c t i v i t y a n d on any o t h e r a p p r o p r i a t e re s tric tio n s . I n t e r e s t e d p e r s o n s may a l s o e x p r e s s t h e i r v ie w s on t h e q u e s t i o n o f w h e th e r co n su m m a tio n o f t h e s u b j e c t p r o p o s a l c a n " r e a s o n a b ly b e e x p e c te d t o p ro d u c e b e n e f i t s t o t h e p u b l i c , su c h a s g r e a t e r c o n v e n ie n c e , i n c r e a s e d c o m p e t it i o n , o r g a in s i n e f f i c i e n c y , t h a t o u tw e ig h p o s s i b l e a d v e r s e e f f e c t s , su ch a s undue c o n c e n tr a tio n o f r e s o u r c e s , d e c re a se d o r u n f a ir c o m p e t it i o n , c o n f l i c t s o f i n t e r e s t s , o r u n so u n d b a n k in g p r a c t i c e s . " I n o r d e r t o e x p lo r e t h e s e i s s u e s , t h e B o ard h a s d i r e c t e d t h a t a n o r a l p r e s e n t a t i o n b e h e ld b e f o r e a v a i l a b l e m em bers o f t h e B oard i n th e B o ard Room o f i t s b u i l d i n g on 2 0 th S t r e e t an d C o n s t i t u t i o n A v e n u e , N. W ., W a s h in g to n , D . C . com m encing a t 1 0 :0 0 a .m . o n O c to b e r 3 0 , 1 9 7 3 . -3 I n t e r e s t e d p e r s o n s a r e i n v i t e d t o p a r t i c i p a t e by p r e s e n t i n g t h e i r v ie w s o n a l l i s s u e s r a i s e d by t h e p e n d in g p r o p o s a l . I n te r e s te d p e rso n s need n o t p a r t i c i p a t e i n t h e o r a l p r e s e n t a t i o n t o h a v e t h e i r v ie w s c o n s i d e r e d , and may do so by w r i t t e n com m ent. W r i t t e n com m ents a s th e y a r e r e c e i v e d w i l l b e m ade a v a i l a b l e f o r i n s p e c t i o n an d c o p y in g i n Room 1020 o f t h e B o a r d 's b u i l d i n g , 2 0 th S t r e e t an d C o n s t i t u t i o n A v e n u e , N , W ., W a s h in g to n , D . C. T he a p p l i c a t i o n may b e i n s p e c t e d an d c o p ie d a t t h e o f f i c e s &£ t h e B o ard o f G o v e rn o rs o r a t an y o f t h e F e d e r a l R e s e rv e B a n k s. Any r e q u e s t s t o p a r t i c i p a t e o r a l l y i n t h e h e a r i n g s h o u ld be s u b m itte d i n w r i t i n g a c c o m p a n ie d , i f p o s s i b l e , by a b r i e f summ ary o f t h e p ro p o s e d te s t im o n y , and s h o u ld b e r e c e i v e d by t h e S e c r e t a r y , B oard o f G o v e rn o rs o f t h e F e d e r a l R e s e rv e S y s te m , W a s h in g to n , D. C . 2 0 5 5 1 , n o t l a t e r th a n O c to b e r 1 , 1 9 7 3 . E ach p e r s o n o r a l l y p a r t i c i p a t i n g i n t h e h e a r i n g w o u ld n o rm a lly b e e x p e c te d t o l i m i t t h e i r p r e s e n t a t i o n t o t h i r t y m in u t e s . A nyone w is h in g t o s u b m it w r i t t e n com m ents on t h i s m a t t e r , on te s tim o n y r e c e i v e d a t t h e o r a l p r e s e n t a t i o n , o r on o t h e r com m ents r e c e i v e d b y t h e B o ard may do so a t a n y tim e b e f o r e t h e c l o s e o f b u s in e s s N ovem ber 3 0 , 1 9 7 3 . By o r d e r o f t h e B o ard o f G o v e r n o rs , e f f e c t i v e A u g u s t 2 0 , 1 9 7 3 . (S ig n e d ) T h e o d o re E . A l l i s o n T h e o d o re E . A l l i s o n A s s i s t a n t S e c r e t a r y o f t h e B oard [SEAL]
@FedFRASER