Magazine article Independent Banker

Hammering out Details

Magazine article Independent Banker

Hammering out Details

Article excerpt

Regulators tackle mutual conversions, disclosures and intermediary roles

Mutual Savings Association Conversions

Issue: Conversion of mutual savings associations to stock ownership.

Agency: Office of Thrift Supervision.

ICBA Comments:

* Commended the OTS for its efforts to ensure that regulations do not favor one form of structure over another;

* Agreed that giving mutual holding companies the same powers as financial holding companies, for example, insurance and securities underwriting powers will make the mutual holding company structure more appealing;

* Agreed it is advisable for a converting mutual association to have a well-thought-out, comprehensive business plan for a conversion, but urged the OTS to be flexible in applying this requirement;

* Supported giving priority to residents of the local community in stock subscriptions and allowing a converted mutual association to establish stock benefit plans to attract qualified management; and

* Supported eliminating stock repurchase restrictions after the first year following conversion which will bring OTS regulations in line with those of other agencies.

Consumer Protections

Issue: Consumer protections for depository institution sales of insurance (mandated by the Gramm-Leach-- Bliley Act) would require written and oral disclosures to consumers for insurance sales. For example, disclosures would report that insurance product are not a bank obligation, not FDIC or government-- insured, may lose value and a signed acknowledgment.

Agency: All four federal banking agencies.

ICBA Comments:

* The final rule should cover only insurance products that could be confused with investments or deposits;

* At a minimum, credit life, crop and flood insurance should be excluded; small business customers should not be considered "consumers" entitled to disclosures;

* The final regulation should define insurance product and should include sufficient flexibility to account for evolving financial services;

* The final regulation should provide special rules to account for transactions where a consumer is not physically present in the bank;

* Disclosures should not be required if the bank merely offers to link its Web site to an unaffiliated insurance company's Web Site; and

* Compliance should not be mandatory for at least one year to provide banks time to adapt. …

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