Congress may be on the verge of authorizing a bundle of products and services for banks, but some bankers are wondering how useful the new activities will be.
That's not because anyone thinks new securities and insurance powers are inconsequential. For most banks, they are enormously important. But just being able to offer insurance through a subsidiary that has no connection with - or worse, lives under a forced separation from - the insured institution won't permit banks and thrifts to become the kind of all- purpose financial services companies they have their hearts set on being.
What's really important, bankers say, is to be able to make all the parts of an organization work together, to be able to realize - yes, that most cherished of buzzwords - synergies.
That means information sharing. Bankers want to be able to give their insurance agencies the customer list - complete with financial information about those on the list - from their credit card subsidiary. And then pass it on to the mortgage unit and brokerage operation.
Many states now set significant barriers to information sharing, said Joe Belew, president of the Consumer Bankers Association, and the Fair Credit Reporting Act sets others. Mr. Belew wants Congress to change that this year.
"If you have a customer and a series of companies that can serve him, everybody in the institution ought to know what the customer's needs are," he said.
As a result, some of the most significant legislation to pass Congress this year could come in the form of two little-noted provisions that are intended to facilitate information sharing and cross-marketing.
One is a provision in House Banking Committee Chairman Jim Leach's Glass-Steagall repeal bill. That measure would permit banks to cross-market products and services between the bank and its securities affiliate.
More important is a provision in Rep. Doug Bereuter's regulatory relief bill that would provide across-the-board permission for banks to cross- market products and services between all its affiliates.
That means that a bank-employed broker-dealer could sit at a computer terminal and call up a list of credit card customers. Since there would be no restrictions on information sharing, the broker would be able to extract a list of customers with suitable income characteristics as prospects for his bank's mutual funds.
Consumer groups have argued in the past that such authority would, in effect, turn large institutions into credit bureaus that should be subject to the same Fair Credit Reporting Act protections as, say, a TRW. They have also raised right-to-privacy concerns.
The Bereuter and Leach bills attempt to address those concerns by requiring banks to notify customers that their financial information could be shared within the banking organization and giving them a chance to "opt out" of the sharing arrangement.
Industry supporters are betting that few people will say no to sharing.
"I don't have time to shop around to see what services my bank has," said Karen Shaw, president of ISD/Shaw, which tracks bank regulation and legislation. "I have a life that extends beyond that. I want them to come to me and tell me what they have."
The downside risk for a bank customer, Ms. Shaw said, is one more telephone call or one more mail solicitation.
Consumer groups are likely to disagree. Already some are demanding that the Bereuter provision be matched with a series of Fair Credit Reporting Act amendments that were considered but rejected in the last Congress. The banking industry opposed that package.
But with Republicans in charge, the Fair Credit amendments aren't likely to go anywhere.
And if any banking legislation is passed this year, it's a pretty good bet that the information sharing and cross-marketing provisions contained in the Leach and Bereuter bills will be among those that land on the President's desk.