Magazine article American Banker

Cheers, Boos for OCC Plan to Define States' Power over Bank Insurance Sales

Magazine article American Banker

Cheers, Boos for OCC Plan to Define States' Power over Bank Insurance Sales

Article excerpt

WASHINGTON-The Office of the Comptroller of the Currency office wanted feedback on whether it should delineate which state rules apply to national banks and which don't.

It got it.

In comment letters filed with the agency, insurance companies blasted the plan, banks said they liked the idea, and state bank regulators argued

that the subject deserved better than being lumped in with scores of other

issues in an 85-page proposed regulation.

The topic of state regulations is a hot one, with banks now battling states over the right to sell insurance. The National Bank Act says bank branches in communities of less than 5,000 people can, but laws in 16 states say they can't.

Barnett Banks Inc. of Florida recently asked the Supreme Court to resolve the insurance dispute.

The Comptroller's foray into this mine field came in the proposed Part 7

rule change published in March. In it, the Comptroller's office states that

it "is considering whether it would advisable" to propose "a specific interpretative ruling addressing the applicability of state licensing requirements for national banks."

The answer from the Ohio National Life Insurance Co., for one, was a clear no.

"If the intent and purpose of your proposed rule is to allow banks to sell annuities or other insurance products free and clear of regulation by

state insurance departments, then the proposed rule, if adopted, would be contrary to the McCarran-Ferguson Act, would have serious anticompetitive effects and would be immediately and persistently challenged by insurance companies and state insurance regulators," wrote David B. …

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