The Office of the Comptroller of the Currency exceeded its authority by broadening national bank crop insurance powers, the Independent Insurance Agents of America said Tuesday.
"This is but another egregious example of the OCC overstepping its authority to rewrite the financial services laws," IIAA senior vice president of government affairs Robert A. Rusbuldt said in a statement.
In a Dec. 29 letter to an Iowa Bankers Association subsidiary, the Comptroller's Office said national banks are not restricted to selling crop insurance from agencies based in small towns. The agency said crop insurance is a logical outgrowth of the lender-borrower relationship, a finding that Mr. Rusbuldt called "dangerous."
"Using the OCC's latest logic, even homeowners insurance could be lumped into the same category because you need insurance in order to get a mortgage from a bank," he said.
The OCC ruling opens the door for a bank to coerce farmers into buying crop insurance when taking out a loan, said Robert E. Fulwider, executive vice president of Wuestenberg Agency, West Liberty, Iowa.
Banks will exert "their leverage over farmers for all that it's worth," Mr. Fulwider said in the statement.
The IIAA did not say whether it planned to sue the agency. Mr. Rusbuldt and Mr. Fulwider did not return calls Wednesday.