Capitol Account: IBAA Breaks Ranks On Insurance Front

When the House Republican leadership agreed to shackle the Comptroller of the Currency - at least on the insurance issue - it looked like an easy call for bank lobbyists. They would oppose any bill, including the all- important regulatory relief package, that contained the so-called Comptroller's moratorium.

"We have severe problems with this," said an angry Kenneth A. Guenther, after Republican leaders agreed to amend the regulatory relief bill to include language barring the Comptroller from approving new insurance powers.

Well, that was then (Tuesday, actually) and this is now (a full day later, as of this writing).

The Independent Bankers Association of America, which Mr. Guenther heads, is having second thoughts, and it looks very much as though the community bank group is ready to swallow hard and take the Comptroller amendment as the price for regulatory relief.

Which means, once again, there will be a great wailing and gnashing of teeth throughout the industry as other bank trade group lobbyists try to fathom just why the IBAA is taking a position directly counter to their own.

Actually, it's not all that complicated. Mr. Guenther's interests are somewhat different from the rest of the industry's. Unlike the American Bankers Association, he doesn't want the Glass-Steagall Act repealed. And his community bank members are pretty happy with the products and services they already have.

They're especially happy with annuities, and Mr. Guenther received assurances from House Banking Committee Chairman Jim Leach that the Comptroller restrictions would specifically codify a recent court case upholding the right of banks to sell that insurance product.

Rep. Leach also assured the trade group executive that the "towns of 5,000" doctrine - the law permitting national banks to market insurance in small towns - would be protected.

With those assurances, Mr. Guenther was prepared to look at the Comptroller's moratorium (or prohibition, as the Independent Insurance Agents of America more accurately describes it) in a different light.

That was convenient, because it turns out his members are a lot more worried about losing regulatory relief than about the fate of the Comptroller of the Currency.

The trade group's leadership - more than 100 bankers all together - was in town this week. When the issue came to a vote, they wanted regulatory relief no matter what.

"The No. 1 priority is to get regulatory relief," Mr. Guenther said. "If we have to swallow this status quo amendment to get that, it does not diminish the importance of regulatory relief."

Other trade groups are likely to oppose the regulatory relief bill with a vengeance. "Our basic position is: no," said Edward L. Yingling, top lobbyist for the ABA.

Mr. Yingling believes he can stop a bad bill before it clears Congress. Right now, he is mulling whether the industry has enough political muscle to keep the bill off the House floor if the Comptroller's amendment is added.

But it's very likely that Mr. Guenther's trade group, powerful in its own right, will end up cooperating with the insurance agents of America on behalf of the regulatory relief bill. And if that happens, the Comptroller of the Currency is a quite a bit closer to having his wings clipped.

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