The easy part was predicting that Barnett Banks would win its Supreme Court case, allowing it and other national banks to operate insurance agencies in small towns.

The harder part is predicting what will happen next.

The most important question initially is whether Congress can be persuaded to pass legislation that either overrides the Barnett decision or imposes a moratorium on new insurance activities for national banks.

However, it is highly doubtful that the insurance agent lobby will be able to push through rollback or moratorium legislation in the face of almost universal bank opposition, especially in an election year.

So look for the Office of the Comptroller of the Currency and the courts to continue to lead the way in setting the parameters of what national banks can and cannot do.

In the wake of Barnett and other court decisions, it is clear that national banks either headquartered or having branches in small towns can now market and sell insurance to existing and potential customers anywhere in the country. The next issue to be addressed is exactly how that can be done.

Clearly mass mailings to existing bank customers and others, national advertisements, and telemarketing are permissible. Insurance could ultimately also be marketed and sold on the Internet.

Some observers have suggested that national banks are only required by statute to have an insurance agency "headquartered" in a small town. Other offices and insurance agents could then be located anywhere, including large-city branch offices of the bank, the argument goes.

As a purely legal matter, they are probably right. In order to exercise insurance agency powers, the national bank need only have its main office or a branch located in the small town. The federal statute in question says nothing about where the insurance agency or its offices must be.

Nonetheless, while anything is possible, the Comptroller's Office is unlikely to attempt such a bold gambit anytime soon. By pushing the envelope in this manner, the agency would open itself up to the charge that it had usurped Congress' lawmaking function and almost certainly invite an insurance agent-inspired congressional backlash.

Thus, for the time being, the comptroller will probably be content to consolidate his recent gains and focus on the other remaining significant issue - how insurance sales by national banks will be regulated.

The comptroller could, if he chose, come up with a comprehensive regulatory scheme to govern the insurance agency operations of national banks and later claim that all state laws on the subject were thereby preempted.

However, the high court's Barnett decision strongly suggests that the states may regulate national banks' insurance activities provided that, in so doing, they do not significantly interfere with the banks' exercise of their insurance powers.

Consequently, the more likely course of action will be for the agency to work cooperatively with the state insurance regulators to develop a single set of joint regulations and guidelines that will apply to national banks' insurance agencies and their employees.

Mr. Buchman is a partner in the Washington law office of Alston & Bird.

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