WASHINGTON - The banking industry is reacting cautiously to news that the Justice Department is investigating efforts by insurers to block sales of the so-called Retirement CD.

"We do believe the insurance industry has acted in concert, and probably illegally, in their maneuvers against the Retirement CD," said Joseph Ignat, executive vice president of American Deposit Corp., which licenses the product. "We are confident that, if that is true, then the Justice Department probe will be thorough."

Edward L. Yingling, executive director for government relations at the American Bankers Association, said he is satisfied to let Deputy Attorney General Robert Litan decide whether the insurance industry broke the law.

"We are sure, if there is a problem, he will take appropriate action," Mr. Yingling said.

One reason for the low-key response is that bankers care more about annuities than the Retirement CD, said Karen Shaw, an industry consultant at ISD/Shaw Inc.

"The Retirement CD is not the same as the broad annuity that bankers are interested in," Ms. Shaw said. "It is a specialized product about which an array of regulatory questions can be raised."

The Retirement CD, unveiled last February, acts much like an annuity. Both products let consumers deposit a lump sum in a tax-deferred account in exchange for periodic payments for the rest of their lives. But the Retirement CD carries Federal Deposit Insurance Corp. insurance; annuities do not.

Banking advocates have suspected for months that the insurance industry was behind a series of legal challenges by state regulators that have plagued the Retirement CD. Currently, courts in Florida and New Mexico are considering challenges to the product, though no institutions offer the CD in those states.

Justice Department spokeswoman Gina Talamona confirmed Friday that the agency is investigating "the possibility of anticompetitive practices in the insurance industry." Banking lawyers said this is the first Justice Department probe of the insurance industry since 1944.

The story was first reported in press accounts Friday.

Debbie Chase, a spokeswoman for the American Council of Life Insurers, said she cannot answer questions on the probe because the government has yet to contact her group. But she did say that the ACLI has not violated the law.

"As a leading trade association representing the nation's life insurance industry, the ACLI is conscious of federal antitrust laws and abides by them in all of its activities," she said. "And we are confident that we have continued to comply with these laws in our consideration of the sales of annuity products."

While banking advocates were temperate in their reaction to news of the probe, one industry official did see an immediate positive impact.

Richard Whiting, general counsel to the Bankers Roundtable, said the probe would make it tougher for the insurance industry to persuade Congress to overturn a recent U.S. Supreme Court decision permitting banks to sell annuities.

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