The Texas Bankers Association is suing the state's insurance regulator for barring banks from selling annuities anywhere except in small towns.
In a suit filed Oct. 8 in U.S. District Court for the Western District of Texas, the trade group accused the Texas Department of Insurance of ignoring the so-called Valic decision. In that case, the Supreme Court ruled that banks can sell annuities without interference from state regulators.
"We've just got fundamentally different interpretations of the Valic decision and, as a result, our members have been unable to really get into the annuities market," said Kelly Rodgers, deputy general counsel to the Texas Bankers Association.
Texas Insurance Commissioner Elton Bomer said he issued the rules as guidance to banks until the state legislature meets next year to hammer out a permanent regulatory framework for insurance and annuties sales.
"I had hoped that everyone involved would exhibit some patience during this interim period," Mr. Bomer said in a statement.
The Office of the Comptroller of the Currency backs the Texas Bankers. In a Sept. 13 interpretive letter, OCC Chief Counsel Julie L. Williams said federal law preempts the restrictive Texas insurance rules because they "significantly impair or prevent" banks from selling annuities in the state.
The Insurance Department is expected to file a response with the court by Oct. 31.