WASHINGTON - House Banking Committee Chairman Jim Leach Thursday asked industry groups as well as the Federal Reserve to draft legislative language implementing a prohibition on new insurance powers for national banks.

The Iowa Republican said his staff would use the draft language to craft its own version of the activities restriction, which he plans to attach to a regulatory relief bill desperately sought by bankers.

Although the House Republican leadership has already decided to impose restraints on the Office of the Comptroller of the Currency, which regulates national banks, the wording of the amendment is crucial.

First, national banks and state-chartered institutions in some jurisdictions already offer a variety of insurance products. House Republicans said they would grandfather, or protect, existing insurance activities, but that statement leaves several questions unresolved.

That's because a number of national banks, including Barnett Banks Inc., Jacksonville, Fla., are in court on the question of whether they can market insurance broadly from an office located within a town of fewer than 5,000 persons.

The Independent Insurance Agents of America want the grandfathering language crafted so that only those institutions litigating the issue would be protected if they win their cases.

Bank groups, on the other hand, want assurances that all banks in a court's jurisdiction would benefit if the cases are won.

Bankers also want assurances that regulators in states that bar state- chartered institutions from selling insurance cannot apply those restrictions to national banks.

The Independent Bankers Association of America, which Rep. Leach asked to submit legislative language, also wants the bill to codify a recent court decision upholding the right of banks to sell annuities.

Although the IBAA has not yet agreed to support the regulatory relief bill if it is amended to restrain the Comptroller's office, it is leaning in that direction.

Kenneth A. Guenther, the group's executive vice president, said his members regard the regulatory relief legislation as crucial, and may be willing to accept a carefully crafted ban on new insurance products.

The American Bankers Association, however, plans to oppose any regulatory relief bill soured by a moratorium on the Comptroller's office, according to the group's top lobbyist, Edward L. Yingling.

While the Fed also was invited to submit language, Rep. Leach said the regulator directly affected - the Comptroller's office - was not. Since the amendment would clip the agency's powers, Rep. Leach said, it would not be "genteel" to ask its assistance.

Given the intense turf battles that often erupt between agencies, the decision to invite the Fed in is bound to raise eyebrows within the Comptroller's office.

An official with the Comptroller's office would say only that the agency is opposed to the amendment. "We see no policy justification to limiting the insurance powers of national banks - retroactively, currently, or prospectively," he said.

Rep. Leach said the Fed also opposes the amendment, but agreed to provide technical assistance in drafting it.

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