Bankers' initial joy over the Supreme Court's decision in favor of nationwide insurance sales by banks is giving way to more practical concerns that their programs pass regulatory muster.
Many bankers are now reviewing a draft letter from the Office of the Comptroller of the Currency that lays out guidelines for national banks to sell insurance and annuities.
And for the most part, bankers seem pleased by what they see.
The letter reemphasizes existing bans against tying banking services to insurance sales; acknowledges states' authority in licensing and setting training requirements for bank-insurance employees; and describes generally how bank programs should be run.
For national banks already selling insurance, the guidance appears reassuring. And several executives said the OCC's advisory letter provides a ready roadmap for banks that want to enter the business.
"I don't think complying with the OCC advisory will pose significant burdens for anybody," said James T. McIntyre, general counsel to Association of Banks in Insurance. "Most banks would employ these practices anyway as a part of due diligence and protecting their reputation," he added.
But a few areas remain uncertain in the wake of the Supreme Court's decision barring states from blocking insurance sales by national banks in towns of 5,000. Bankers are eager for the OCC to clarify what exactly a bank must do within a town of 5,000 and what a bank insurance agency can do beyond the town's borders.
"Do we have to have a headquarters there?" asked Richard O. Bowman, president of Portland, Ore.-based U.S. Bancorp's insurance subsidiary. "Do we have to have bodies there, or can I have people in eight or nine towns outside of the town of 5,000?" he asked.
Federal guidance, while welcome, will hardly ease the local headaches plaguing many interstate bankers.
States that have traditionally been opposed to bank insurance sales could impose licensing requirements or other restrictions to hinder bank insurance activities. And that could prompt litigation, said Kathleen Connell, general counsel to the Financial Institutions Insurance Association.
Working out the state issues without resorting to lawsuits will be "the next great step," Ms. Connell said.
Dennis W. Toivonen, vice president with Chase Manhattan Bank, New York, said that banks are fully ready to comply with state regulations so long as the rules don't discriminate against banks.
"Our main concern is that we are treated like other agents in the states that are not affiliated with financial institutions," he added.
But U.S. Bancorp's Mr. Bowman, an independent insurance agent for 19 years before joining the bank, said that varying state requirements are a nettlesome fact of life for all insurers operating across state lines.
"This is not just a bank thing,"he explained. "Complying with education and licensing across 50 states is a challenge for insurance companies, too."