[Congressional Record Volume 143, Number 45 (Wednesday, April 16, 1997)]
[Extensions of Remarks]
[Pages E676-E677]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   PRESERVING THE DUAL BANKING SYSTEM

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                       HON. JOSEPH P. KENNEDY II

                            of massachusetts

                    in the house of representatives

                       Wednesday, April 16, 1997

  Mr. KENNEDY of Massachusetts.  Mr. Speaker, I rise today to comment 
on the importance of preserving our dual banking system. As we march 
into the brave new world of

[[Page E677]]

interstate banking and branching, we must not forget the critical role 
that States play in creating an effective banking system which meets 
the diverse needs of community participation, economic development, and 
the service of all people in our society.
  Specifically, my concern is that Federal regulators do not preempt 
State law when it comes to determining how State banks best operate 
within their own boundaries and serve their communities. This concern 
is sparked by a situation in my own State of Massachusetts. Recently, 
the Bank of New York, a State bank, filed an application to increase 
their investment in State Street Boston Corp. a Massachusetts-based 
holding company which is the parent company of a Massachusetts State 
chartered bank, State Street Bank.
  On March 14, 1997, the Massachusetts Board of Bank Inc. ruled against 
approving Bank of New York's application to increase its share in State 
Street Boston Corp. Acting pursuant to Massachusetts State law, the 
Board of Bank Inc. cited ``serious concerns regarding the potentially 
negative competitive effects of this petition.'' The board further went 
on to find that the Bank of New York application ``failed to meet its 
burden to demonstrate that the public convenience and advantage will be 
promoted'' as a result of its proposed investment increase in State 
Street Boston Corp.
  Mr. Speaker, this was precisely the type of State prerogative that we 
tried to preserve when we approved the Riegle-Neal Interstate Banking 
and Branching Efficiency Act back in 1994. In my opinion, if Federal 
regulators approve this application and preempt Massachusetts State law 
in this matter, we will have undermined both the intent of Riegle-Neal 
and the preservation of the dual banking system.
  So, I ask my colleagues to join me in urging the Federal Reserve to 
defer to the will of the people of Massachusetts, by acknowledging the 
Board of Bank Inc.'s ruling against the Bank of New York's application 
to increase its stake in State Street Bank.

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