Acting Comptroller of the Currency Julie L. Williams on Wednesday came out against the deal on bank insurance powers the Senate is considering as part of financial reform legislation.
"This is neither a good deal nor a fair deal for banks, or for their customers," Ms. Williams wrote in a Sept. 9 letter.
The compromise struck by some bankers and insurance agents "would effectively insulate state rules that discriminate against banks and place significant, unfair and anticompetitive restrictions on banks' ability to sell insurance."
At Senate Banking Committee Chairman Alfonse M. D'Amato's urging, New York bankers and agents crafted a compromise that would let banks sell insurance, but would protect state regulators' authority in some areas.
State insurance commissioners could regulate banks in 12 areas, including licensing and advertising, Ms. Williams said. Under the proposed legislation, if a bank were sued, the judge would not have to give the Comptroller's Office the deference traditionally afforded government agencies, Ms. Williams noted.