States to Push Congress on Insurance Sales Rules

Article excerpt

State lawmakers plan to lobby Congress for legislation that would force national banks to obey all state insurance regulations.

The National Conference of State Legislatures, holding its annual meeting here, is expected to endorse today a resolution asking Congress to rein in the Office of the Comptroller of the Currency, which has claimed the right to override state laws that restrict national bank insurance sales.

State Rep. Robert Brawley, R-N.C., put it simply when he told lawmakers Sunday that the Comptroller's Office is trying to "bypass state regulators."

Ironically, the state officials were piqued by draft insurance guidelines that OCC officials have insisted were intended as a peace offering. The proposal, released in June, noted that state licensing, training, and consumer protection laws apply to national banks. But the guidelines said banks could challenge other types of state insurance laws and the Comptroller's Office would make case-by-case determinations on which apply. To judge this, the OCC will rely on the recent Barnett case, in which the U.S. Supreme Court said state laws may not prevent or significantly interfere with banks' insurance operations.

But state officials claim the OCC's interpretation of the decision is too broad. Speaking at the state legislatures' meeting Sunday, Maine Commissioner Brian Atchinson said the OCC's draft guidelines would void any law that "frustrates, hampers, impairs, or interferes with the ability of a national bank to exercise its insurance authority."

"That's not the Barnett standard," Mr. Atchinson said. "It's not up to the Comptroller of the Currency to decide when state laws apply and when they don't."

Mr. Atchinson and other state insurance commissioners will meet with Comptroller Eugene A. Ludwig and his senior staff Thursday to discuss the draft guidelines.

Julie Williams, the OCC's chief counsel, said Monday that the agency took the language to which Mr. Atchinson and other regulators object straight from a series of cases cited by the Supreme Court in the Barnett decision. …