WASHINGTON - The House of Representatives voted Tuesday to strip the so- called Retirement CD of federal deposit insurance.

The Retirement CD combines the tax-deferred interest and lifetime payout of annuities with the deposit insurance guarantee of a regular CD.

If the depositor dies before collecting the full maturity amount, the bank profits. If the depositor lives longer, the bank loses money.

Rep. Marge Roukema, R-N.J., who sponsored the bill, said the product poses "serious safety and soundness risks" for banks.

"The lifetime payment feature exposes the bank to a potential liability of unknown duration," she said in a statement Tuesday.

The insurance industry has argued that the Retirement CD is actually an annuity and that federal deposit insurance gives banks an unfair advantage over insurers.

In the Senate, Banking Committee Chairman Alfonse M. D'Amato, R-N.Y., and Sen. Christopher Dodd, D. Conn., have voiced support for similar legislation. Only 12 banks are licensed to sell the Retirement CD.

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