WASHINGTON - The Comptroller of the Currency's office has come up with three standards for judging new products that national banks want to offer.
Julie Williams, the agency's chief counsel, said the standards are an attempt to prepare for bank entry into in a wide range of new products.
In assessing a proposed product, she said, the Comptroller's office will consider whether:
*It is an outgrowth of a recognized banking activity. (Ms. Williams cited brokerage services as an example.)
*It looks like a product customers are used to getting from their banks. Annuities, for example, resemble other products banks sell, such as certificates of deposit.
*Its risk is similar to types of risk banks have traditionally assumed. Falling into that category would be leasing, Ms. Williams said; a bank's leasing a property it owns is similar to lending in that the bank must analyze creditworthiness.
In outlining the standards, Ms. Williams was not suggesting that anything a bank proposes will be rubber stamped.
"When we look at new products, our views will be colored by what is safe and sound," she said.
But if banks were barred from new businesses, the industry would suffer as customers fled to competitors, she explained at the Financial Markets Association's compliance seminar here last week.
"There is risk in the long-term in limiting what banks can do," Ms. Williams said. "Banks face increasing competition in areas they used to have by themselves."
These standards tie in with a proposal the Comptroller's office issued last November to let a bank's subsidiaries offer products and services that the parent cannot, Ms. Williams said.
The proposal, designed to ease regulatory burden, will be finalized in the next few months, she said in a separate interview. Although she would not comment on specifics, Ms. Williams said the final rule will largely reflect the proposal.
A major challenge, she acknowledged, is how the Comptroller's office will share supervisory responsibility for investment products with other regulators, especially the National Association of Securities Dealers.
"We need to sort out questions of inconsistent applications of our own standards and inconsistencies between us and the NASD," Ms. Williams said.