Academic journal article ABA Banking Journal

ABA Action Assures Banks' Future in Insurance

Academic journal article ABA Banking Journal

ABA Action Assures Banks' Future in Insurance

Article excerpt

From the Merchants National case to state legislation in Washington, Illinois, and Florida, from rulings by the Comptroller of the Currency to the precedent-setting Delaware state bank insurance law, barriers keeping banks out of insurance are falling fast.

So far, Congress has not taken an active role. Most of the positive changes for banks have come about through action by state legislatures, federal regulators, and courts. Action in capital. But Congress hasn't spent all of its time on the sidelines. There have been hearings on the meaning of recent bank gains in insurance. For example, the House Banking Committee subcommittee concerned with insurance sought to analyze the implications of the Merchants National case. In testimony delivered before that group by Alan R. Tubbs, President, Maquoketa State Bank, Maquoketa, Iowa, ABA said the Federal Reserve Board acted properly when it permitted Merchants National Corp. to continue the insurance activities of two recently acquired Indiana bank subsidiaries.

Tubbs' testimony challenged what he called an insurance-industry attempt to "create a false climate of emergency in Congress." Tubbs said some parties in the insurance industry "seem to be trying to panic Congress into taking unwarranted action that would decimate the dual-banking system and do great harm to American consumers.

Tubbs said there is a long and broad history of bank involvement in insurance. As evidence, he cited the fact that 24 of the 50 states permit banks to engage in insurance activities beyond those expressly permitted by federal law for national banks or bank holding companies.

Unstoppable force. It's easy to see why the insurance industry is alarmed. …

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