Narrow Legislation on Fund Sales Is Urged
Talley, Karen, American Banker
A member of the House Ways and Means Committee is pressing for a narrow version of legislation to oversee bank mutual fund sales programs.
A bill, introduced last week by Rep. Richard E. Neal, D-Mass., would require financial institutions to supply mutual fund customers with written notice that their investments are not insured.
The measure, which would amend the Federal Deposit Insurance Act, mandates that mutual fund advertisements and related marketing materials carry similar disclaimers.
Rep. Neal's bill mirrors a lone provision in the sweeping legislation that House Banking Committee Chairman Henry B. Gonzalez, D-Tex., and Rep. Charles Schumer, D-N.Y., introduced late last month.
Both proposals are a first stab by lawmakers to step up regulation of bank mutual fund activities. The proposed legislation comes on the heels of standards and guidelines that bank and thrift regulators issued this year.
Rep. Neal left the Banking Committee in January to serve on the tax-writing Ways and Means Committee.
But a spokesman for the financial institutions subcommittee said this would not prevent the representative's bill from being considered during broader hearings that the panel plans early next year.
Rep. Neal's staff was working on his bill when Rep. Gonzalez and Rep. Schumer introduced their measure, a spokeswoman for Rep. Neal said.
The Gonzalez-Schumer legislation drew immediate howls from bankers and bank trade groups. …