WASHINGTON - House Banking Committee Chairman Jim Leach told the Independent Insurance Agents of America to take their complaints about bank insurance powers to the Comptroller of the Currency.
In a letter Friday, the Iowa Republican said he agrees with the agents that the national bank regulator has overstepped its legislative mandate.
But he warned the agents not to imperil his Glass-Steagall reform bill by trying to attach any provisions to restrict the Comptroller's authority to rule certain insurance products "incidental to the business of banking."
"I would reiterate that your organization's brief on this subject is with the Comptroller's office and not HR 1062, which scrupulously attempts to be neutral on insurance issues," Rep. Leach wrote.
The letter represents a softening of Rep. Leach's position toward the agents. Earlier in the day Friday, the banking committee chairman had sent the group a sharply worded letter accusing it of "reneging" on an agreement to remain neutral on his Glass-Steagall bill.
The second letter, which followed a late-afternoon meeting with the agents, acknowledged that the trade group had advised the banking committee staff that it had changed its position and might oppose the Glass-Steagall bill if it did not also address the insurance issue.
"The committee would appear to thus have been forewarned by this margin that your earlier commitment to me was not ironclad," Rep. Leach wrote.
The second letter was sent to home of Paul Equale, the group's senior vice president of government affairs, on Friday evening.
In a press briefing Monday, Robert A. Rusbuldt, vice president of federal affairs for the insurance agents group, said that the only way to "level the playing field" between banks that sell insurance products and the insurance industry is through the legislative process.
"Talking to the Comptroller of the Currency, from our perspective, has not resulted in any kind of results," Mr. Rusbuldt said.
Despite Rep. Leach's suggestion that the agents keep bank insurance power issues separate from his Glass-Steagall reform bill, Mr. Rusbuldt said that his group will continue to attempt to attach a measure that could restrict bank insurance powers.
That bill, introduced by Commerce Committee Chairman Thomas J. Blilely, R-Va., would mandate that state insurance commissioners regulate insurance products sold by banks. Hearings on the Blilely bill are scheduled to begin before a House Commerce subcommittee on May 22.
The insurance issue could become a major stumbling block for Rep. Leach's Glass-Steagall bill. The agents are politically powerful and could persuade the House to include their amendment. However, many bank lobbyists believe they can block the bill if the agents prevail on that amendment.
In an April 5 letter, Rep. Leach blasted Comptroller of the Currency Eugene A. Ludwig for a recent proposal to let national bank subsidiaries engage in activities not allowed in the bank itself.
As of Monday, a spokeswoman for the Comptroller's office said that Mr. Ludwig had not yet responded to Rep. Leach's letter.