Citicorp's move to test the limits of banking laws -- by offering a board range of financial and banking-type services under the aegis of a credit card in the Washington and Baltimore markets -- has been slowed down by the Federal Reserve Board.
But area bankers don't expect the New York banking giant to retreat much from its promotion of a "Choice" for area consumers in a new world of financial institution competition. In deed, Citicorp's Choice credit card plan is seen as evidence that nationwide banking is on the way in this country, whether or not Congress ever condones the opening of bank branches across state lines.
When Citicorp unveiled its new credit card plan recently, through advertising and without seeking prior government approval, the region's banking community was shocked. Citicorp Financial Inc., a Maryland subsidiary of the New York bank holding company, previously operated the NAC credit card program. The card was given a new name and the public was offered an array of innovative services.
Although there was no mention of traditional banking in the Citicorp promotion of its Choice card, the services offered add up to a fairly complete list of banking needs for many citizens -- and more: Choice offered normal use of the cridit card, at such stores as Garfinckeld and a 1/2 percent rebate on everything charged, providing $600 or more was spent by the consumer within a 12-month period.
It also offered automatic money-machine use for account information, making payments and receiving cash advances at offices in regional malls; 8 percent interest on funds deposited as "prepayments" of future purchases; loans of up to $10,000 for car purchases or other needs; ready personal checkcashing at retail outlets and 24-hour customer service by telephone.
Some area bankers thought this was all a bad dream, although they are well aware that Citicorp Chairman Walter Wriston has gained the reputation of an executive willing to take risks and test banking regulations fully in seeking to expand his business base.
The Maryland Bankers Association adoped a "wait-and-see" attitude. That could be translated to mean that some bankers wanted Citicorp stopped, although the state's attorney general has ruled that Citicorp Financial operations do not come under state banking commission jurisdiction. At the same time, the "wait and see" could also be translated as follows: Some bankers hoped Citicorp would be successful in its initiative and thereby open the doors for other banks to seek business across state lines through credit card subsidiaries.
Last Friday, the nation's central bank acted to trim back some of the controversial Citicorp Financial "choices." For the time being, at least, the banking firm must stop the check verification aspect of its service and the interest payments on money accepted as prepayments, which Citicorp described as an attractive layaway system for financial planning.
But these are the only two aspects of the Citicorp Choice card that have been curtailed by the Federal Reserve Board.
And, just as quietly as Citicorp Financial offered Choice credit cards to area residents, a separate Citicorp subsidiary has entered another area business. Citicorp Homeowners Inc. opened a residential housing office in Annandale, to serve the metropolitan market of homeowners seeking mortgages of $150,000 or more, to help executives in interstate transfers and to help first-home buyers. Citicorp is planning to make mortgages on D.C., Maryland and Virginia properties.