Up & Down with Antitrust

On the charge that great banking power is being concentrated in a few hands to the detriment of business and the public, the Justice Department has been particularly eager to prevent several proposed bank mergers. In Chicago and New York City, Bobby Kennedy's trustbusters have puffed into courts in last-minute and futile attempts to block such mergers. Despite their defeats, trustbusters had high hopes of winning a meticulously prepared suit against a Philadelphia bank merger. That merger would create the city's biggest bank, linking the Philadelphia National (now second largest with assets of $1.2 billion) and the third-ranking Girard Trust Corn Exchange (assets: $853 million). Together these two banks, said Justice, would be 50% larger than First Pennsylvania Banking & Trust Co., now in first place, and control 37% of Philadelphia's banking business.

Last week the trustbusters got a setback in Philadelphia. Federal District Judge Thomas J. Clary approved the merger. Instead of restraining competition, said he, "the larger bank will be able to compete on better terms with banks of other cities and states that have been draining this area of banking business." (Big Philadelphia companies often have to go to New York or Chicago to find one bank large enough to finance their expansion plans.) Merging banks in other cities can now be expected to cite that opinion.

But the trustbusters salvaged something. In the first court interpretation of the Federal Bank Merger Law of 1960, Judge Clary found that the Justice Department is legally empowered to challenge banking mergers even after the Treasury Department approves them. Treasury has held that its Comptroller of Currency is the final authority. Justice intends to appeal to the U.S. Supreme Court, and the Philadelphia banks will postpone their merger until a final decision comes down.

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