Senators Rebuff Volcker’s Nationwide Banking Plan

Members of the Senate Banking Committee told Federal Reserve Chairman Paul A. Volcker today that there is virtually no chance they will consider his proposal to authorize interstate banking across the country.

“There ain’t no way we’re going to put that provision in this bill,” Sen. Jake Garn (R-Utah), the committee chairman, told Volcker, referring to an omnibus banking bill the committee is considering.

“You can comment all you want about the national trigger, but the national trigger ain’t going to pass this place,” Sen. Mack Mattingly (R-Ga.) added. The national trigger is a future date at which full interstate banking would take effect.

Volcker appeared before the committee to urge that it expand a catch-all banking bill passed by the Senate 89 to 5 last year. The bill died in the House.

Volcker urged a stricter test for thrift institutions, saying thrifts should be required to devote at least 65% of their own assets to home loans.

Volcker also urged expansion of provisions that limit state powers to authorize new banking activities, saying states’ “parochial concerns” can sometimes undermine bank safety and soundness.

Volcker also urged that the legislation move beyond approving regional banking arrangements and outline a transition to safeguards for interstate banking.

“The need for legislation is only intensifying as time passes,” Volcker said.