The Federal Home Loan Bank Board yesterday handed the nation's federal savings and loan institutions broad authority to issue credit cards, such as Visa and Mastercard, and granted other extensions of S&L powers.
In a series of moves that continued a trend to extend more bank-like powers to savings associations, the Board approved rules allowing S&Ls to extend credit to users without requiring it to be secured by a savings account and to issue credit cards much as banks issue bank credit cards.
The FHLBB also adopted other rules allowing S&L customers to pre-authorize direct bill payment out of telephone bill-payer accounts by S&Ls, rather than requiring the customer to call to authorize each payment and allowing S&L customers with accounts in one federally insured association to make cash withdrawals from other associations within a 50 mile radius.
In general the measures continue to blur the distinctions between savings and loan associations and commercial banks begun earlier this year with the adoption of the financial institutions deregulation act. The act, signed into law March 31, was designed among other things to allow S&Ls to compete on a more equal footing.
The impact of yesterday's actions "is going to be fairly small," predicted Brian Smith, assistant director of research for the U.S. League of Savings Associations.
The FHLBB's actions concerning credit issuance and telephone bill-payer accounts cover some 2,000 federally chartered institutions.