Savings and loan associations soon may be able to install electronic teller machines at locations across state lines.
The Federal Home Loan Bank Board has put out for comment a proposal to remove the geographic restrictions affecting the positioning of "remote service units" by federally insured thrifts. The comment period is 30 days.
These units include automated teller machines that can be used to dispense cash and to make deposits and loan payments, and point-of-sale terminals that allow merchants to debit the customer's savings account directly. The units could be placed in stores or other locations at the discretion of the thrift institutions. Those that already have branches across state lines would be expected to install electronic teller machinery there.
More importantly, the proposal would allow federally insured S&Ls to participate in electronic systems with other S&L in other states.
In the Washington area, the three First American Banks owned by the holding company Financial General Bankshares have an electronic network that allows customers to make withdrawals from machines located outside their home state.
The largest electronic network of 21 banks in 11 states is owned by Western Bancorp. This week Western Bancorp's member banks announced they were assuming a common name, First Interstate Bank. Full-page advertisements in the financial press proclaimed the availability of "the full spectrum of banking services."
In fact, while a customer with an automated-teller-machine card issued by the First Interstate Bank of California may withdraw cash from a machine at one of three First Interstate Banks in Wyoming, for example, the Californian cannot make deposits in Wyoming. Apparently taking deposits -- but not permitting withdrawals -- is considered to be engaging in interstate banking, which is prohibited by the McFadden Act.
S&Ls, on the other hand, are not prohibited by law from engaging in interstate branching, but they have not yet received the necessary regulatory permission to do so. The Bank Board, in not yet authorizing the practice, has heeded the fears of small associations that they might be gobbled up by industry giants if full interstate branching is permitted.