BofA eyes end of deposit limit, report says
Bank of America wants to eliminate federal law that prevents banks from gaining more than 10% of U.S. deposits through acquisitions, newspaper reports.
NEW YORK (CNNMoney.com) -- Bank of America is pushing for removal of the federal law that stops banks from using acquisitions to hold more than 10 percent of the nation's bank deposits, according to a published report.
The Wall Street Journal says that while many lawmakers and community-bank advocates have previously opposed raising the cap, some past critics in Congress say they are open to discussing a change.
Charlotte-based Bank of America is the only U.S. bank close to the cap, with $590.6 billion, or 9.2 percent of U.S. deposits as of June 30, according to the most recent figures from the Federal Deposit Insurance Corp., the federal agency that backs bank deposits.
The FDIC lists JP Morgan Chase (Charts) as No. 2 in terms of deposits, with 7.2 percent, and Well Fargo & Co. (Charts) No. 3, with 4.8 percent, slightly ahead of Wachovia (Charts). But the Journal reports that since June 30, Wachovia has moved into the No. 3 spot with its acquisition of Gold West Financial.
Some Bank of America competitors told the Journal privately that the big banks may form an alliance with smaller banks to oppose any change in the limit. And Bank of America CEO Kenneth Lewis said he won't be surprised to see other large banks try to keep the cap in place.
"Why wouldn't you want to create a barrier to us?" he said.
Lewis told the paper that his bank can continue to grow even if the cap isn't lifted and that he isn't in the market for a U.S. bank now.
"As I look across the country, I don't know what I would want," he said, though he cited two foreign-owned banks in Chicago, where Bank of America is particularly weak. LaSalle Bank is a division of ABN Amro Holding (Charts), and Harris National Bank is a unit of the Bank of Montreal (Charts).
ABN holds about 0.9 percent of U.S. deposits, while Bank of Montreal has about 0.4 percent of deposits, according to the FDIC figures.
Rep. Barney Frank, the Massachusetts Democrat who heads the House Financial Services Committee and was once a vehement opponent of raising the cap, told the newspaper he now is open to reconsidering the cap.