Big Insurance Companies Seek to Form Federal Savings Banks
Steve Bailey and Steven Syre The Boston Globe, THE JOURNAL RECORD
In another odd twist of deregulation, the nation's largest insurance companies have sprinted to Washington seeking unusual new powers: to form federally chartered savings banks.
John Hancock Mutual Life Insurance is right in the middle of the pack, requesting a new charter from the federal Office of Thrift Supervision for its low-profile New Hampshire trust company. The comment period for Hancock's application ended Tuesday and not all written responses were flattering.
There hasn't been so much interest in federal thrift charters since the wild and crazy days of Texas savings and loans in the 1980s. At least a dozen big insurance companies have asked the OTS for charters recently, and the agency has already approved several, including an application from Travelers. Federal thrift charters are in demand because they best suit the cross-country banking service interests of big insurers, and there is at least a chance they could become scarce in the future. The possibilities are appealing: Offer car loans and insurance in one package or perhaps trust services to prospects who have just received an insurance settlement check. The new services could be offered nationwide from one office. Proposed legislation would have merged OTS into other federal regulatory agencies and killed its charter-issuing ability. The proposal died before and may never see the light of day. But insurance companies are betting that the status of existing federal thrifts would be fully grandfathered into the future, even if OTS is merged or the powers of new thrift charters become more limited. "We don't want to guess where they're going to end up," said Richard Zeloski, president of Hancock's First Signature Bank & Trust. The strategy is to act now. Most big insurers own some kind of limited-purpose bank or state-chartered finance business. They are seeking to convert the status of those units and are finding receptive regulators. The OTS is fighting a political battle for its own survival. …