Bankers have found a lot to hate in the financial reform bill passed last week by the House Banking Committee.

The industry is vowing to fight new insurance and consumer provisions as well as plans to permit cross-industry mergers because nonfinancial holding companies acquiring banks would avoid strict Federal Reserve regulation.

"Everything about this bill I've seen so far is a concern," said James F. Beall, chairman and chief executive officer of Farmers and Merchants Bank in Centre, Ala. "I don't know if I've seen anything I like."

"These problems have to be addressed," said G. Lee Griffin, chairman and chief executive officer of Premier Bancorp, in Baton Rouge, La. "If they're not removed, I don't think the banking industry is going to be able to support this bill."

Bankers are especially incensed by the bill's insurance provisions.

For starters, they claim the plan would damage the Comptroller of the Currency's ability to expand national bank powers. Under the bill, the Comptroller's Office would lose its virtually unassailable authority to decide what products banks can sell. Backed by the courts, the comptroller has let banks move into the annuities and insurance businesses, despite protests from state insurance regulators.

But under a two-step process, the legislation would allow state insurance regulators to challenge the comptroller's rulings made after Jan. 1. First, the Federal Reserve Board would decide whether a state regulator's complaint was legitimate. Complaints that are would be sent to the newly created National Council on Financial Services, which would decide whether the product was banking or insurance.

Bankers claim their ability to offer many new products, and possibly some existing ones such as annuities and letters of credit, could be put at risk. Banks are also miffed they still would be required to base insurance sales operations in towns with fewer than 5,000 residents.

James M. Culberson Jr., chairman of First National Bank and Trust in Ashboro, N.C., said the insurance provisions violate the intent of financial reform. "They giveth with the right hand and taketh with the left," he said.

Banks also are fighting a host of consumer protection rules that would make it more expensive for them to enter the securities and insurance businesses. For instance, banks would be required to offer low-cost "lifeline" checking accounts to be eligible to merge with nonbanking firms.

"This just reeks of more red tape and costs," said Joseph L. Boling, president and chief executive officer of Middleburg Bank in Middleburg, Va.

Most banks already offer some type of low-cost account, he said, noting that his bank lets customers write an unlimited number of checks in return for an average balance of $500 and a $3 monthly fee.

Other consumer provisions would require banks to:

Register brokers with the National Association of Securities Dealers.

Disclose when products are not federally insured.

Make it clear credit applications are not influenced by purchase of nonbanking products.

Develop suitability standards to ensure that nondeposit products are appropriate for each customer's financial condition.

Keep banking and nonbanking activities physically separated.

Develop consumer dispute procedures.

Bank regulators already are doing a good job keeping the industry's nondeposit sales practices in line, said Sanford A. Beldon, president and chief executive of Community Bank System in DeWitt, N.Y. "There's no reason for any additional burden," he said. "Many of us have been selling these products for quite some time."

Finally, bankers complain that plans to let nonfinancial firms buy banks would put the industry at a disadvantage. The legislation requires the Fed to limit its holding company supervision to activities that might pose a risk to the federal safety net. "That puts us at a big disadvantage," said Mr. Beall of Farmers and Merchants.

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