The Office of the Comptroller of the Currency has concluded "the negatives significantly outweigh the positives" in financial reform legislation approved by the House Banking Committee last week.
"The total package contains significant rollbacks in the current authority of national banks, imposes unique new burdens on all banks relative to their competitors, and imposes new sets of regulatory requirements on banks," according to a memo OCC Chief Counsel Julie L. Williams sent Tuesday to Comptroller Eugene A. Ludwig.
According to the memo, the OCC's authority to determine what products and services a national bank may offer "is severely undercut" by provisions in the legislation shifting authority for defining banking products to a new National Council on Financial Services.
The deference courts have granted the agency's interpretations of the National Bank Act "would be radically altered," Ms. Williams said.
"Existing and future products are endangered if they are labeled 'insurance' by a state insurance regulator," she added. "Competitors of national banks are subject to no such restriction on their ability to develop and provide new products."
Ms. Williams also noted that insurance firms would be permitted to own banks as subsidiaries while banks would have to operate insurance activities from a holding company unit.
Only banks among companies selling insurance would be required to determine that a policy is "appropriate" for a customer, Ms. Williams said.
In a "blatant rollback" of bank powers, the bill would bar banks from selling title insurance from small towns, she added.
