Despite congressional displeasure and lawsuits and threats of more, the Office of the Comptroller of the Currency continues to give preliminary approval to controversial "nonbank banks" at a fast pace.
Since last November, when Comptroller C.T. Conover ended a self-imposed moratorium on approving applications for nonbank banks, the agency that regulates federally chartered banks has approved 167 applications and turned down none. Another 208 are pending.
Last week, the comptroller approved 30 applications for Texas alone. The Texas attorney general contends that Texas law prohibits nonbank banks and has said he will sue the comptroller's office. Because of another lawsuit, the comptroller's office has said it will not give final approval to any more applications until Feb. 11 -- it has given final approval to 26 nonbank banks, of which 14 are operating.
Only in the complicated regulatory structure that controls the banking industry could the phenomenon of a nonbank bank arise.
Nonbank banks are institutions that slip through a loophole in the federal statutes that bars interstate banking and restricts what kinds of companies may own banks. To escape being defined as a bank in the Bank Holding Company Act, a nonbank bank must forgo either accepting checking accounts or making commercial loans.
In every other sense, the nonbank bank is a bank. It is regulated by government agencies and can apply for federal deposit insurance.
But its existence is a direct threat to federal laws prohibiting interstate banking and House Banking Committee Chairman Fernand J. St Germain (D-R.I.) wants to outlaw them. After approving a few nonbank banks in 1983, Conover imposed back-to-back moratoriums to give Congress a chance to pass legislation. When it did not, the comptroller began to act.
Most of the applications, however, come from so-called bank holding companies that want to open offices in other states. Bank holding companies (companies that own banks) need Federal Reserve Board approval as well as the comptroller's, and the Fed is much more wary of the nonbank bank than is the comptroller.
The Fed has been dragging its feet on approving nonbank banks and is expected to continue to do so for as long as it can. PROBLEM BANKS CONTINUE TO GROW . . .
Lots of banks are getting healthier as a result of two years of economic recovery, but the overall number of problem banks continues to rise because of problems on American farms.
Federal Deposit Insurance Corp. spokesman Alan Whitney said that at the end of December, 847 banks were on the agency's list of banks in serious difficulty or near failure.
Farm banks -- most of which are conservatively operated and heavily capitalized -- used to be underrepresented on problem lists. Although farm banks account for 30 percent of the nation's 14,700 banks, at the end of December they accounted for 37 percent of the problem banks. In 1982 and 1983 they accounted for 20 percent to 24 percent of the problem banks.
Conover has warned that as the problems of farmers continue to grow, so will the difficulties faced by banks that make loans to farmers. Most farm banks are fairly small, and their difficulties do not threaten the overall system, but some major banks -- including the nation's biggest, Bank of America -- have big farm-loan portfolios that are causing them problems. CLEAN SWEEP . . .
Now that Conover has announced that he intends to resign in the spring, it appears that by midsummer, both the comptroller's office and the FDIC will be under new stewardship during a period in which the banking system continues to suffer from more problems than in any period since the Great Depression.
FDIC Chairman William M. Isaac and board member Irvine H. Sprague have indicated that they want to leave the three-member FDIC board. The third member of the board, by law, is the comptroller of the currency.