In recent months, non-banking companies have been moving at a brisk pace onto the turf once reserved for commercial banks.
The movement has been so fast that even once-amenable Comptroller of the Currency C. Todd Conover is trying to put a temporary hold on the incursions. But the regulated, who have been outmaneuvering financial regulators for the past few years, appear to have done it again.
The moratorium Conover imposed only a month ago on the creation of so-called non-bank banks already has been tested by the J.C. Penney Co. And officials at the agency say there is probably little they can do about it, except huff and puff.
The Federal Reserve Board long has resisted the breakdown of the once-clear demarcations between banks and other firms.
In addition to state-chartered banks that are members of the Federal Reserve system, the Fed regulates bank holding companies, which are businesses that own one or more banks. To avoid the unfriendly Fed, companies such as Gulf & Western or Parker Pen that have set up or bought banks have gotten rid of either the institution's commerical loan operations or checking accounts. To be a bank under the Bank Holding Company Act, an institution must make business loans and accept demand deposits or checking accounts.
This end-run around the act has displeased the Fed and its chairman, Paul A. Volcker, enormously.
The Office of the Comptroller of the Currency, which regulates federally chartered banks has been more amenable to experimentation.
It already has approved a dozen non-bank banks. About 10 more applications are pending.
But under pressure from Congress as well as the Federal Reserve, Comptroller Conover last month cried, in effect, "Enough."
He said his agency would not accept any more applications for non-bank banks until Jan. 1, 1984, although he said the agency would consider applications that were in hand by April 5.
He said that should give time to explore the ramifications of non-banking firms entering the banking industry. Officials in Conover's office said that they know there is a loophole in their moratorium. The comptroller can block applications for new federal charters, but usually cannot prevent a change of control of an existing bank.
Nonetheless, a spokesman in the Office of the Comptroller of the Currency said, the agency felt the clear statement of the comptroller "would have a chilling effect" on the attempts of non-banking firms to enter the banking industry. "We hoped people would get the message" and hold off any plans for new non-bank banks, the spokesman said.
J.C. Penney may have received the message, but it still wants its bank. Like competitor Sears, Roebuck & Co., Penney is seeking a foothold in the financial services business. Last week Penney announced that it plans to buy the First National Bank of Harrington, Del. Penney does not need approval to buy the $28 million institution.
It is doubtful, regulators said, that the comptroller can find grounds on which to disallow the acquisition.
If Penney acquires the bank, it probably will spin off enough banking operations to avoid regulation by the Fed. "We're dismayed," said a spokesman for the comptroller.