Senate Votes to End Interstate Banking Curbs : Congress: Clinton is expected to sign the bill, which will allow coast-to- coast banking after years of failed attempts.

The Senate on Tuesday approved landmark legislation abolishing decades-old barriers that restrict banks from operating branches across state lines, ensuring that coast-to-coast banking will become law after years of failed attempts by lawmakers.

The bill, approved 94 to 4, goes to President Clinton for his expected signature. The House approved an identical measure Aug. 4. Congress has been trying to do so since the mid-1980s.

The measure repeals legal barriers that date to 1927 and is likely to accelerate the pace of acquisitions in the banking industry, which has already seen its ranks shrink by more than 3,500 institutions over the past decade.

Consumers will be able to deposit checks or get a loan anywhere in the nation where their hometown bank has a branch.

Analysts say the estimated 60 million people who live in metropolitan areas crossing state lines--such as New York, St. Louis or Washington--will be the first to feel the impact.

“The bill is a consumer bill,” said banking consultant Bert Ely. “It’s going to allow banks to operate more efficiently.”

That, in turn, will generate higher interest rates on savings deposits, lower service charges for bank customers and lower rates on loans, Ely said.

But consumer groups and small-town banks have warned that big banks--through branching--will enter communities and drain the deposits now resting in community banks.

The legislation, which revamps the 1927 McFadden Act and the 1956 Bank Holding Company Act, permits banks to operate interstate branch networks starting in 1997.

States could pass a bill to permit such a move before then or opt out of interstate branching altogether by passing legislation before June 1, 1997.

A year after the bill’s enactment, healthy banks will be allowed to purchase banks in other states, regardless of state laws prohibiting such transactions.

Currently, banks that operate regionally or nationally must set up independent banking subsidiaries in each state.

According to one study, interstate branching will save the banking industry $1 billion a year.

Banks will be allowed to merge subsidiaries around the nation that now operate independently into a single branch network.

NationsBank Corp., the nation’s fourth-largest bank and a proponent of the legislation, expects to save $35 million to $50 million a year.

A spokesman cited savings on paperwork, as well as costs related to executive travel and meetings.