Seeking to pressure banks into accepting a financial reform compromise, the American Insurance Association is urging its 300 members to apply for federal thrift charters.
AIA president Robert E. Vagley said Monday that he hopes banks will see the new thrift charters as a competitive threat and agree to a bill that gives states the dominate role in regulating insurance. In return, the group will support eliminating many of the barriers between the banking, insurance, and securities industries.
"We need to reinstate the level playing field," said Mr. Vagley, who outlined the group's 1998 legislative agenda for reporters.
The group holds promotional sessions periodically to explain how and why insurance companies should acquire thrift charters, he said. At least several more insurers are expected to apply for thrift charters in the next few months, he added.
The Office of Thrift Supervision already is considering 21 requests from nonbanks for charters, including 12 petitions from insurers. It has given three insurers permission to open thrifts since lawmakers began talking about eliminating the charter last year.
David Pratt, the group's senior vice president for federal affairs, said March will be the make-or-break month for financial modernization. If the Banking and Commerce committees can work out their disagreements, then the House could vote by the end of next month.
Floor action should take about a day, with fights likely over proposals to eliminate the thrift charter and to further restrict bank insurance sales, he said.
That would give Senate Banking Committee Chairman Alfonse D'Amato time to hold hearings and a markup, he said.
Mr. Pratt said the trade group will heavily lobby the New York Republican, who is up for reelection this fall. "The good news is that he has a good opponent who is viable," Mr. Pratt said. "We really want this bill and he knows it."
Mr. Pratt also extended an olive branch to banks, saying both industries would benefit if Congress modernizes the financial system. Some of the biggest winners would be regional banking companies such as Norwest Corp., NationsBank Corp., and Banc One Corp., he said.
"Let's stop fighting," he said. "Let's make a deal."
The AIA represents property and casualty insurers that collected more than $60 billion in premiums last year.
