Another court has backed the Office of the Comptroller of the Currency's broad interpretation of bank insurance powers.
A U.S. District Court in Connecticut ruled May 23 that the agency may let banks operating small-town agencies sell insurance to people living elsewhere.
In Shawmut Bank Connecticut v. Googins, the Connecticut insurance and banking regulators as well as two groups of insurance agents argued that the National Bank Act only permits banks to sell insurance to people in towns with fewer than 5,000 people.
While a bank must base its insurance operation in a small town, the Comptroller's Office said sales are not restricted to people living there.
Two U.S courts of appeals, first in 1993 and again in 1995, have agreed with the OCC.
"The real question is why do the independent agents continue to litigate this issue," asked Kathleen W. Collins, a lawyer at Morgan, Lewis & Bockius here.
OCC Chief Counsel Julie L. Williams said legal wins give bankers more negotiating power in the state legislatures. "The court victories translate into a change in the dynamics in working things out at the state level," she said.