OCC: Leach Bill Still Keeps It From Wider Insurance Powers

The more things change, the more they stay the same.

That's what the Office of the Comptroller of the Currency is saying about the latest version of House Banking Committee Chairman Jim Leach's bill to repeal the Glass-Steagall Act and trim burdensome regulations.

Previous drafts of the Iowa Republican's legislation contained a "permanent moratorium" on the comptroller's ability to expand national banks' insurance powers.

But when Rep. Leach unveiled the latest version of his bill Friday, he said that it "takes out all references to moratorium language which the OCC had previously used as an argument for opposition."

Despite that assertion, the Comptroller's Office is far from convinced. In an interview Friday, an agency official said the bill still goes a long way toward blocking the agency from broadening insurance powers.

The latest language would not affect national banks' insurance products authorized by the Comptroller's Office before Jan. 1. However, national banks would be permanently barred from providing products that were treated as insurance by state regulators as of Jan. 1 and had not been previously authorized by the Comptroller's Office.

As far as the agency is concerned, that adds up to a permanent ban. The provision is more restrictive than previous versions, the official said. Those earlier drafts had given the Office of the Comptroller the authority to permit national banks to offer insurance products that it deemed to be part of the business of banking. The new language would prevent the agency from approving additional products, the official said.

A senior House Banking Committee aide said the Comptroller's Office is overreacting. The bill only affects existing insurance products that banks aren't selling, he said.

Few products, except for life insurance underwriting, fit that bill, the aide said. "The question that should be posed to the OCC regarding the permanent ban is: do they really think they are going to authorize life insurance underwriting in national banks?" the aide said.

The aide noted that the bill protects the comptroller's authority to define new insurance products as "incidental" to banking, and thus as being permitted under the National Bank Act.

However, some observers interpreted the ban more broadly.

"If any state has regulated any product as insurance, it would be banned prospectively," said Karen Shaw Petrou, president of ISD/Shaw Inc., which tracks banking legislation and regulations. "It makes it impossible for the OCC to approve new insurance products."

David Roderer, a partner at Winston & Strawn, agreed, saying that the conflict between the Office of the Comptroller and Rep. Leach is more than "a war of words."

"It may no longer be an explicit ban on the comptroller, but it's a permanent curtailment of the substantive powers contained in the National Bank Act," Mr. Roderer said.

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