House Banking Committee Chairman Jim Leach and Comptroller of the Currency Eugene A. Ludwig are back at it.
The comptroller complained Tuesday that the Iowa Republican's new insurance measures are "anti-competitive" and would harm national banks.
Rep. Leach shot back Wednesday, accusing the comptroller of playing "political gamesmanship" by trying to expand his agency's turf at the expense of the Federal Reserve Board.
Rep. Leach's insurance provisions are attached to legislation that aims to bail out the thrift deposit insurance fund and grant banks regulatory relief. Separately Wednesday, 14 Democrats on the House Banking Committee wrote to Rep. Leach, asking that the regulatory relief provisions be dropped from the bill.
The insurance provisions in the package include:
*Expanding activities allowed for bank holding companies from "closely related to banking" to "financial in nature." But holding companies would continue to be barred from selling insurance and annuities.
*Allowing state regulators to dictate licensing rules for all insurance agents, including bank employees.
*Banning federal deposit insurance for the Retirement CD.
*Ordering the General Accounting Office to study the impact of state supervision on national bank insurance sales.
Earlier this year, Rep. Leach repeatedly complained that the comptroller was trying to derail his Glass-Steagall repeal legislation because it allowed new securities underwriting powers only for holding company subsidiaries, not for banks themselves. That bill failed in June amid intense industry opposition.
Mr. Ludwig said that excluding insurance and annuities sales from the definition of what bank holding companies can do could lead to renewed court challenges over bank insurance powers.
Rep. Leach countered that "it is bizarre that the comptroller would object to flexibility being provided in this legislation to its competitive regulator."
Mr. Ludwig also said a ban on federal deposit insurance for the Retirement CD is unnecessary. "We know of no bank, national or state, currently selling such products," he wrote.
Mr. Ludwig also said states could use licensing laws to prevent agents from working for banks.
The GAO study would be fruitless, Mr. Ludwig added, because "states have only a limited role in examining national bank activities."
Rep. Leach said the proposed licensing rule is based on the comptroller's most recent draft of bank insurance sales guidelines. "For the Comptroller to object to its own language represents political gamesmanship of a type I've never encountered in my time on Capitol Hill," he said.