WASHINGTON - Money and power sit at the heart of three cases the banking and insurance industries are asking the Supreme Court to resolve this year.

Each side is appealing because it wants a definitive ruling on two important questions: Can banks sell insurance? Can the states regulate bank entry into this market?

"There are two separate wars going on," said David Roderer, a partner at the Winston & Strawn law firm here who represents 13 trade groups and two banks in the insurance fight. "It is like World War II, with the Pacific and the Atlantic fronts. You wonder if they have anything to do with each other, but they do."

The three appeals involve Barnett Banks Inc., Jacksonville, Fla.; Owensboro National Bank of Kentucky; and First National Bank of Denham Springs, La.

In a series of filings in the three cases during the past week, bankers, insurers, and the government laid out their rationales for a Supreme Court resolution of the issues during its next term.

Money is foremost in the insurance battle. Banks want to compete head- to-head with insurance agents, believing their existing infrastructure and customer base give them competitive advantage in the fight for fees.

"The spread business is declining, and banks are hungry for fee income," said Philip S. Corwin, a lobbyist at the American Bankers Association. "Selling insurance is a great low-risk, high-fee business."

Insurance agents, however, don't want to relinquish their profitable niche, much as a country store doesn't want a Wal-Mart to open next door.

Also, bankers see insurance sales as the first step toward management of insurance pools - the premiums policyholders pay every month. Managing this money could supply revenue that eclipses fee income from policy sales tenfold, Mr. Roderer said.

But before the banking industry can tap this new revenue source, it must convince the Supreme Court to rein in the power of state insurance commissioners.

Barnett, the ABA, and other industry groups are arguing that Section 92 of the National Bank Act permits banks in small towns to sell insurance - with or without state approval.

But the insurance industry, represented by Ann M. Kappler of the Jenner & Block law firm here, argues that the McCarran-Ferguson Act allows states to regulate who sells insurance. And this law overrides the National Bank Act, insurers argue.

Both sides point to loopholes in each law to buttress their positions. Insurers argue the National Bank Act would take precedence if it pertained to insurance rather than banking.

Bankers, however, maintain that the National Bank Act must pertain to insurance because it mentions the word numerous times. They also minimize McCarran-Ferguson, claiming that states are stretching the law to cover bank activities.

Insurers counter that these rules are meant to protect consumers from banks that might coerce them into buying a policy as a condition for getting a loan.

If the states lose this battle, they lose their monopoly over the last pillar of the financial services industry that they fully regulate. (They lost banking during the past century.) To insurers, that would be bad news.

"We have perhaps the most thriving and competitive insurance industry in the world," said Dean Sackett, an assistant vice president at the National Association of Professional Insurance Agents. "There is no need to expand the federal bureaucracy for an industry that is thriving."

State insurance commissioners are intimately familiar with the business, he said. By contrast, the Office of the Comptroller of the Currency - which has been permitting banks to sell insurance - isn't equipped to oversee an industry new to it, he said.

"Our political system is moving back to the federalist system we were founded on," Mr. Sackett said. "We simply don't need the federal government here."

That tack worries banking advocates, who contend insurance commissioners could use their role to regulate a host of new financial products that possess insurance characteristics. These include universal life policies, which are a cross between mutual funds and annuities.

"It would be a Balkanization of the delivery of bank products," Mr. Roderer said. "It would be confusing. It would be costly. It would be wasteful."

OCC Chief Counsel Julie Williams said these arguments, while important, overlook the real reason why banks should sell insurance.

"It is not simply an abstract question of federal law intersecting with state law," she said. "It is about providing services to customers." If banks can provide better service, regulators should let them compete, she said.

Ms. Williams also noted that the court could take a middle road by ruling that states can regulate - but not prevent - bank insurance sales. This would preserve the state regulatory role while opening the market to banks.

Insurers, however, are suspicious of this potential outcome, fearing it could also open the door to federal regulation.

Mr. Roderer said the prospects for a banking industry victory are encouraging. The court has shown a decidedly "pro-competition" bent from which the industry could benefit, he said. Also, the court took a first step toward opening up insurance when it ruled this year that banks can sell annuities.

The justices have until Oct. 2 to decide whether to review one, all, or none of the three cases. Legal observers on both sides said Supreme Court review is nearly guaranteed because lower courts have issued conflicting opinions.

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