Magazine article American Banker

New York Panel Backs Insurance Powers for Banks

Magazine article American Banker

New York Panel Backs Insurance Powers for Banks

Article excerpt

NEW YORK -- Gov. Mario M. Cuomo will receive recommendations today from a high-level commission suggesting that state-chartered banks be allowed to underwrite insurance.

The Temporary State Commission on Banking, Insurance, and Financial Services voted 12-4, with one abstention, on Tuesday in favor of a package that he governor and state legislature must now conside enacting into law.

The 17-member commission thus concludes its life, having been appointed last August by the governor to recommend ways to deregulate the financial services industry and reestablish New York State's preeminence in the financial world.

It had been clear for some time that the commission favored the admission of banks into the insurance underwriting business, despite hours of testimony by members of the insurance industry pleading against such a move.

The bank/insurance debate now shifts to the legislature, where it is expected that lobbying will be heavy from both these industries.

Assemblyman Arthur J. Kremer, D-L-Long Beach, chairman of the Assembly ways and means committee, saidhe does not "see the legislature expanding insurance powers for banks at this session.

"I can see a number of minor proposals being adopted by the legislature, but on the question of other businesses selling insurance, that's going to be very controversial," he said.

Sen. John Dunne, R-Garden City, a member of the Senate finance committee, added that "the policy of merging financial institutions is anational issue and must be defined by the Congress. We, in New York, must do our part, but we don't want to get caught up in amad rush for investment dollars to the detriment of the basic solvency of national institutions."

The insurance industry has already begun its campaign to halt bank advancement into its domain, distributing leaflets at the commission's meeting through a coalition of three insurance associations called B.R.A.C.E. (Bank Regulation: Agents' Committee Effort).

"It'll probably be the bloodiest battle of the century," said Benjamin Brewster, executive vice president of the New York State Association of Life Underwriters Inc., which helped form B.R.A.C.E.

"There is no fallback position," he said. "this is a battle to the death for us -- literally."

Some of the nation's largest banks, including Chemical Bank, Manufacturers Hanover Trust Co., and Morgan Guaranty Trust Co., have New York State charters. Two other giants, Citibank and Chase Manhattan Bank, have federal charters.

At least one proposal was roundly praised by all parties. It called for "some type of 'lifeline' bank account ... through state-chartered depository institutions that would offer consumers basic banking services at minimal cost. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.