A headline in Saturday's Business section incorrectly identified the agency regulating the interstate expansion of savings and loan institutions. The agency is the Federal Home Loan Bank Board.
The Federal Home Loan Bank Board yesterday took down more of the barriers to interstate expansion by savings and loan associations, offering healthy S&Ls the opportunity to branch into several other states.
The bank board said it would not only allow associations to branch across a state line in return for buying a sick S&L but also would give them the right to branch into three additional states, or even more in some cases.
The board also agreed to give federally chartered savings and loans the same rights as state-chartered institutions to branch into other states under interstate banking compacts.
Board Chairman Edwin J. Gray emphasized that the decision to permit federally chartered associations to participate in state regional banking plans would not permit "general unrestricted branching on a national or broad scale."
Nevertheless, a spokesman for the National Council of Savings Institutions called the move "a big step in the direction of national interstate branching." Mark Clark of the U.S. League of Savings Institutions said the board's action would allow thrifts to catch up with banks, which are rapidly expanding through acquisitions across state lines.
The regulation would affect federal S&Ls in all states that have formed regional banking compacts -- about half those in the nation. The regional banking pacts allow banks and savings and loans to buy banks and thrifts in other states participating in the compact or to establish new branches there. Now federally chartered S&Ls will have the same power as their state-chartered counterparts.
The idea originally was proposed by the bank board 2 1/2 years ago, but no action was taken. Since then, the number of regional pacts and interstate bank mergers has grown, particularly in the Northeast, Southeast and Northwest.
Yesterday's actions are the latest move by the bank board to encourage savings and loan mergers as a way of strengthening the battered industry. Last month, the board proposed permitting District savings institutions to branch into Maryland or Virginia and vice versa.
One of the regulations announced yesterday is aimed at alleviating the burden on the Federal Savings and Loan Insurance Corp. of dealing with the hundreds of ailing thrifts. FSLIC has had increasing difficulty finding healthy institutions that are willing to take them over without large government subsidies.