Magazine article American Banker

Report Says OCC Not Ready to Regulate Bank Insurance Sales

Magazine article American Banker

Report Says OCC Not Ready to Regulate Bank Insurance Sales

Article excerpt

The Office of the Comptroller of the Currency is not prepared to oversee the boom in national bank insurance sales that last year's financial reform law is expected to spark, according to the Treasury Department's inspector general. "It is uncertain whether OCC is ready to respond to any major stress on the national banking system as a result of a rapid expansion into insurance activities," Dennis S. Schindel, assistant inspector general for audit, wrote in a June 27 report that was released late last week. "OCC will need to better prepare for these impending changes and address the expected increase in national bank insurance activities." The Gramm-Leach-Bliley Act of 1999 removed numerous regulatory barriers between banking and insurance, making way for banks to significantly expand the insurance side of their business with less interference from state laws. The report said that such growth could pose systemic risks and raise consumer protection concerns. Though Gramm-Leach-Bliley puts state insurance regulators in charge of supervising bank insurance activities, the report warned that it remains the responsibility of the comptroller's office to examine insurance sales that threaten a bank's safety and soundness. The report recommended that the comptroller's office determine how heavily it can depend on each state regulator's findings to conduct its own supervisory duties. "To accept state regulators' work without determining its reliability would be tantamount to abdicating OCC's responsibilities as the primary supervisor over the national banking system," the report said. …

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