In Brief: Ruling Lets State Banks In N.Y. Sell Insurance

State-chartered banks and trust companies in New York are now free to sell insurance directly in towns with fewer than 5,000 people.

Last week the State Banking Board used a new law to approve the regulation.

The law was enacted last year to give the board the opportunity to respond quickly to business changes at the federal level, said Michael P. Smith, president of the New York Bankers Association. Under the old system, state laws preempted by federal regulation could take as long as five years to be changed by the Legislature, he said.

The bill was controversial because of the view that it took some power away from the Legislature, he said. The New York Bankers Association had actively supported the measure so that state-chartered banks could have the powers gained by national banks.

In the wake of last week's decision, Mr. Smith said, he expects to see as many as 150 state-chartered banks get into the insurance business in the next few years.

"We're really at the early stages of this despite the fact that you read a lot about the laws being changed," he said.

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