The Federal Trade Commission has dismissed a three-year-old complaint against Perpetual Savings and Loan which alleged that its directors also served illegally on the boards of three of the city's largest banks.
The FTC had claimed that Perpetual allowed seven of its 11 directors to serve on the boards of the city's second, third and fourth largest commercial banks -- American Security and Trust Co., National Bank of Washington and Union First National Bank.
An order quietly handed down on Sept. 6 this year said that the complaint was dismissed because the law Perpetual was alleged to have violated was amended last July to exempt savings and loans from the commission's jurisdiction.
Last year the commission affirmed a March 1977 decision by an administrative law judge who said the potential for anticompetitive behavior in interlocking directorates was great. At that time the commission, by a 4 to 1 vote, said, "Interlocking directorates among competitors by their very nature create the potential for anticompetitive conduct and thus have been long condemned by the law."
The commission ruled that "to permit interlocking directorates among financial institutions who compete for the funds of the public, and in the making of loans in our credit-dominated society, would be to create potential conflicts of interest which could have seriously adverse effects on competition."
The case was remanded to the commission last November by the U.S. Court of Appeals to reconsider its decision in light of the Financial Institutions Regulatory and Interest Rate Control Act of 1978. Part of that act prohibits "a range of interlocks between savings and loan associations and competing banks." Those interlocks, however, are "exempted from the act's proscriptions for a period of 10 years" after the act was enacted.
The case, which could have had far reaching implications because of the widespread practice of interlocking directorates, was dismissed, however, after the FTC law was amended by Congress.