DETROIT — The chairman of Sears, Roebuck & Co. on Monday urged bankers and government to support creation of limited-service "family banks" instead of keeping strict regulations that smother competition.
"We believe the consumer should have the same right to choose financial services as they have to choose their clothing," Chairman Edward R. Telling said at a news conference.
Telling urged Sears' competitors and congressional leaders to join the company in supporting the concept of banks that would lend money for personal and family use but would be forbidden from making commercial loans.
"The ironclad opposition to the mingling of banking and commerce represents a knee-jerk response in favor of outmoded and anti-competitive systems," Telling said in a speech to the Economic Club of Detroit.
"We're wasting time calling each other names, trying to define what is and what isn't a loophole and scheming to secure some temporary legislative or regulatory advantage," Telling said.
Chicago-based Sears offers non-bank financial services in its retail outlets, including certificates of deposit through a brokerage house, and for more than 25 years has operated a bank in California.
The federal definition of a full-service bank is one that both accepts deposits and makes commercial loans.
Many bank holding companies have skirted the longstanding prohibition on interstate banking by setting up operations that typically do not make commercial loans but provide such consumer services as credit cards, mortgages and personal loans.
Telling said it is difficult to estimate how large a market could be tapped by family banks, but he said the $300 billion held in low-interest passbook savings accounts would be a good starting place.
"It's staggering," he said.
Family banks, as Telling conceives them, would be allowed to lend money for personal or family use, for charitable purposes, for small businesses and for family farms.
"In short, they should be encouraged to help average families reach their financial goals and contribute to the health of the economy as a whole," Telling said.
Family banks would be required to offer no-fee checking with no minimum balance and to maintain 60% of their assets in consumer loans, Telling said.
"To make sure that a local bank owned by a national firm kept faith with the community, a family bank should be required to make available within its own state loans equal to at least 60% of the deposits generated within that state," Telling said.
Telling said that family banks within the Sears system could be a mix of free-standing institutions and banking facilities within Sears stores.
"We're involved in a new game where the referee hasn't even set the rules yet, and planning is very difficult."