The House Banking Committee voted Wednesday to replace regional banking compacts with full interstate banking in five years but with limits on how much the biggest banks can buy up.
The bill was approved 31 to 18 after the committee repeatedly rejected attempts to leave untouched Monday's Supreme Court decision that allows states to band together to exclude banks from states outside the region.
The court ruling sanctioned the pact between Massachusetts and Connecticut aimed at preventing New York's big banks from moving in.
Similar multi-state compacts have been formed in the Southeast and the Northwest.
The Supreme Court ruling was consistent with language passed by the Senate last year.
Toward Interstate Banking
In light of the ruling, Sen. Jake Garn (R-Utah), chairman of the Senate Banking Committee, has taken interstate banking "off the table" as his panel works on an omnibus banking bill, committee staff director Danny Wall said.
The House committee, however, voted to move toward full interstate banking with a bill requiring states that join regional compacts to allow institutions from any other state beginning July 1, 1990, or after two years in a compact, whichever date is later.
States that have not allowed any out-of-state banks to enter could continue to do so even after the trigger date.
While expanding interstate banking, the committee voted to prevent big banks from using the new powers to buy up the nation's banking system.
The bill would ban any mergers among the nation's 25 largest banks.
It would also block banks holding more than 1% of U.S. deposits from acquiring any other banks with more than $100 million in deposits, except to bail out an ailing institution under federal supervision.
BankAmerica Corp. of San Francisco, Citicorp of New York and First Interstate Bancorp of Los Angeles already surpass the 1% threshold, according to committee figures.