When a local bank wanted to open up several years ago in the city's gleaming Greenway Plaza complex, it faced a problem - where to put a drive-in window.
Six months later, after getting a city ordinance passed, an easement approved and a State Highway Department go-ahead, the Plaza Commerce Bank stretched 1800 feet of pneumatic tube out its office, high above eight lanes of speeding traffic on the Southwest Freeway and down a service road to a teller's cage at a six-lane, drive-in facility.
The tube, which carries mostly paper for processing but possibly an occasional bundle of cash, was an elaborate and legal nicety designed to meet the state's peculiar banking laws.
It is to these lengths that banks in Texas must sometimes go to circumvent the state's bar on branch banks. Texas is one of 12 state which forbid branches.
On Nov. 8, Texas voters will cast their ballots on a state constitutional amendment permitting electronic fund transfer systems - bank computer terminals and automatics teller machines - to be installed at innumerable retail stores. While the amendment does not change the law on branch banking, it is an end run around it.
Five of the 32 states which have considered the question of whether a bank terminal is a branch have held that is and have banned such installations. Seventeen permit unlimited terminal installations and the others haven't considered the issue.
What really is at stake in the election, both opponents and proponents of the amendment agree, is the nature and extent of banking competition in a state where just 15 bank firms control more than half of the $53 billion in deposits.
Will the big banks dominate banking still more, or would approval of the amendment permit smaller banks and other financial institutions to compete more effectively with the larger ones?
Texas, the third largest state, is the home of 10 per cent of the nation's 4,400 banks. The arguments raised in this election parallel the concerns expressed in a federal report released yesterday that new banking technology could "lead eventually to the domination of banking by a handful of giant depository institutions."
In years to come, a grocery store customer, for example, could add money to his account by a simple trip to the store. Or with the use of a magnetic card, he could transfer money instantly from his checking account to the store's account. The costliness of automatic teller machines, which dole out cash to a cardholder at shopping centers and the banks themselves, makes retail outlets' connections to banks more lucrative.
Retail outlets are "where it's at, what it's all about," said Jim Williams, president of both the Government Employees Credit Union in San Antonio and the Credit Union National Association. "Why? That's where the people are."
Since the nation's supermarkets already cash more checks than do the nation's bank, the financial community here generally agrees that the importance of the Texas amendment is that deposits as well as other services like overdraft protection could be had at a grocery store or other retail outlet linked by computer to a bank. And competition for deposits is what banking is about.
Approval of the amendment would have the greatest impact on banking here since Congress modified the federal bank holding act in 1970, a move that brought Texas bank holding companies (a banking company owning a number of subsidiary banks) into their preeminence today.
In 1970, four such companies in the state owned 12 subsidiary bank with 3.2 per cent of the deposits. Today 36 holding companies with 245 subsidiaries hold $28.6 billion or 54 per cent of all Texas deposits.
The 15 top bank holding companies have 51 per cent of the state's deposits, which, according to Rep. Henry Reuss (D.Wisc.), chairman of the House Banking, Finance and Urban Affairs Committee, "is an amazing figure in a state with a stiff non-branching law."
Reuss, concerned about the situation in Texas last month asked the Justice Department to investigate the anti-competitive impact of bankholding companies' taking over independent banks.
He has also expressed concern that big banking institutions not be allowed to use electronic banking to drive either small banks or smaller retail stores out of existence.
It is not surprising then that a state constitutional measure of such possible impact has sharply divided the community of financial institutions.
Much of the opposition stems from a controversy over whether all financial institutions would be able to share electronic banking systems or whether sharing would be among banks only.
The amendment would permit retail stores to have a single computer hookup: the concern is over who would get to use it.
The Texas Bankers Association, which represents all banks in the state, tried to make the amendment more palatable to the Independent Bankers Association, which represents 500 of the state's 1,100 smaller banks, with a provision "for the sharing of such electronic devices or machines among banks . . ."
Credits unions and savings and loans are not covered by the no-branch banking law here; some have begun to set up automated tellers, and one already is talking about retail outlets.