Magazine article American Banker

Leach Asks Fed, Trade Groups to Provide Wording of Insurance Powers Prohibition

Magazine article American Banker

Leach Asks Fed, Trade Groups to Provide Wording of Insurance Powers Prohibition

Article excerpt

House Banking Committee Chairman Jim Leach Thursday asked industry groups as well as the Federal Reserve to draft legislative language implementing a prohibition on new insurance powers for national banks.

The Iowa Republican said his staff would use the draft language to craft its own version of the activities restriction, which he plans to attach to a regulatory relief bill desperately sought by bankers.

Although the House Republican leadership has already decided to impose restraints on the Office of the Comptroller of the Currency, which regulates national banks, the wording of the amendment is crucial. First, national banks and state-chartered institutions in some jurisdictions already offer a variety of insurance products. House Republicans said they would grandfather, or protect, existing insurance activities, but that statement leaves several questions unresolved. That's because a number of national banks, including Barnett Banks Inc., Jacksonville, Fla., are in court on the question of whether they can market insurance broadly from an office located within a town of fewer than 5,000 persons.

The Independent Insurance Agents of America want the grandfathering language crafted so that only those institutions litigating the issue would be protected if they win their cases.

Bank groups, on the other hand, want assurances that all banks in a court's jurisdiction would benefit if the cases are won.

Bankers also want assurances that regulators in states that bar state chartered institutions from selling insurance cannot apply those restrictions to national banks. …

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