Business: Confusion in Justice

One of the biggest Midwest bank mergers in a decade was only three days away. Then the Justice Department rushed into a Chicago court to demand a temporary injunction barring the move. The Government trustbusters were out to prevent the absorption of Chicago’s City National Bank & Trust Co. (assets: $385 million) by its neighbor across La Salle Street, the Continental Illinois National Bank & Trust Co. (assets: $2.8 billion).

If the object was to shield smaller business, Justice’s move seemed to make little sense, since slipping City National might well go under if the merger were blocked. And why the rush? Justice had previously led the banks to believe that if it contested the merger at all, it would wait until after it had been consummated.

Yet last week, even though the U.S. Treasury Department had already approved the merger, Justice Department lawyers moved in to object that it would create “the largest bank in Chicago.”

Unimpressed by the implication that bigness must necessarily be bad, Federal Judge Julius H. Miner denied the injunction, contending that there was “no legal basis for the suit in the first place.” For the Justice Department, Miner’s decision was a bitter blow, coming as it did two weeks after a Dallas judge had similarly refused the department’s attempt to bar the merger of aircraft-making Chance Vought Corp. into Ling-Tem-co Electronics Inc. But at week’s end, as the two Chicago banks became one, a Justice Department spokesman coldly warned: “We still plan to go to trial.”