Shrewd Coincidence

The Federal Reserve Board's antitrust hearings in San Francisco against Transamerica Corp. last week entered their second year. For the past year, FRB has been trying to do two things: i) prove that Transamerica is a monopoly, and 2) force it to sell its holdings in Bank of

America, the biggest U.S. private bank. Last week, Transamerica made a move on the second point.

With no warning to FRB, Transamerica President Sam Husbands announced a sale of 1,199,554 Bank of America shares on the open market, to lower Bank of America holdings from 22.8% to 11.1%. The stock sale, said Husbands, would bring in some $50 million which would be used "to liquidate loans" that were necessary to buy the stock originally "and to provide working capital."

What close-cropped, drawling Sam Husbands, 58, did not mention, but what everybody understood, was that the stock sale would take much of the steam out of FRB's drive to prove Transamerica a monopoly. Though Transamerica officials insisted that the stock sale was only "coincidental" to FRB's prosecution, it looked like a shrewd coincidence engineered by Sam Husbands.

A former RFC director and onetime South Carolina banker, Sam Husbands, in the words of his onetime boss Jesse Jones, "knows more about banks than any man in the U.S." He also knows a lot about what goes on in Washington. FRB is backing a bill in Congress which would give the board greater regulatory powers over bank holding companies that control more than 15% of the stock of an operating bank. Once Transamerica's holdings in Bank of America are reduced to 11.1%, it could argue that FRB should not be concerned with Transamerica even though the 11.1% might still be working control.

Nevertheless, FRB indicated last week that it wanted more concessions from Transamerica and was not yet ready to drop its case. But Transamerica was hopeful. As one official cautiously put it: "If [the stock sale] results in the board doing anything, we can't imagine it would be adverse to our interests."

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