Profits in second quarter fell just short of record.

Washington - Six banking trade groups announced Tuesday that they were developing detailed guidance to help banks police themselves in the sensitive business of selling uninsured investment products.

The guidelines, due in 90 days, are intended to ensure that banks explain to customers that mutual funds and annuities, unlike deposits. are not guaranteed by the Federal Deposit Insurance Corp.

The move by the coalition of bank groups is an apparent bid to preempt tougher action by regulators and lawmakers.

The boom in mutual fund sales through banks has drawn considerable scrutiny in recent months from lawmakers and regulators.

A chief concem is that customers may not understand the risks of investing in stock be fueling this confusion by not drawing clear enough lines between mutual funds and deposits.

Preventing Abuses

$TAt a news conference announcing their plans, the banking executives emphasized that banks are determined to do right by investors.

"Our banks are in it for the long haul, and they do not want abuses that would put their Business at risk," said Joe Belew, president of the Consumer Bankers Association.

The overriding aim, said Anthony Cluff, executive director of the Association of Reserve City Bankers, is to ensure that mutual funds are sold in a manner that is "truthful, complete, easily understood, and not misleading or obscure."

Joining Mr. Belew and Mr. Cluff at the news conference were chief executives from the American Bankers Association, the Independent Bankers Association of America, the National Bankers Association, and the Savings and Community Bankers of America.

Set of Positions

The guidelines, unveiled in outline form on Tuesday, cover five key areas: disclosure, location of investment sales, bank program management, employee compensation, and training.

Earlier this summer, Office of the Comptroller of Currency and the Federal serve Board issued guidelines covering much the same and the banking executives were hard pressed to point to any major differences in their approach.

"We want to complement, not compete with, the work of the regulators," Mr. Belew said. "This is a major event in the financial landscape, and we'd clearly be criticized if we did not come up with a set of positions."

As the guidelines take shape over the next three months, the associations will come forth with considerably more detail in key areas than the regulators have, he added.

One such area is training said Paul A. Schosberg, president of the Savings and Community Bankers.

Simplification at OTS

In a related development, the Office of Thrift Supervision moved on Tuesday to clarify and simplify its policies for thrifts selling uninsured products.

"Because of the huge increase in activity in this area, we wanted to make sure that these sales activities were being conducted properly," said John C. Price, OTS' acting assistant director for policy.

Under the new OTS guidance, thrifts should require investors to sign forms acknowledging that they have received information about the product, something the OTS has long required for thrifts selling securities affiliated with the company.

In addition, thrifts now should not only follow customer safeguarding procedures for affiliate companies that sell uninsured products, but also should do so for nonrelated companies that lease space in thrift lobbies for the sales.

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