Bankers are mounting an 11th-hour campaign in Rhode Island to block a law that would bar most bank employees from selling insurance.

The Rhode Island governor, Lincoln Almond, has until Thursday to sign or veto the bill, which bank lobbyists view as the latest flareup in their war to gain insurance powers. That bill would apply to bank employees involved in lending and deposit taking.

Winning final approval last week by the state House of Representatives, the Rhode Island measure adhered closely to a prototype developed by the Independent Insurance Agents of America. The American Bankers Association has been fighting these proposals state by state.

"Rhode Island has been very aggressive in developing laws that are attractive to banking," said William A. Farrell, general counsel of the Rhode Island Bankers Association. If the banks fail to win a veto, he said, "it will kill any sort of competitive advantage a bank might have in selling insurance here."

The ABA is asking state trade group executives to get the banks' position across to local lawmakers. On July 25, the ABA sent the 50 state associations a four-page memo alerting them to the insurance lobby's "last- ditch effort in the statehouses to impede bank insurance activities."

At least one other state - Illinois - has shown serious interest in the agents' proposal. A measure containing a number of their provisions was introduced in the state Legislature. But lawmakers postponed action until January to give bankers and insurance agents a chance to reach a compromise.

Although banking groups are complaining, the agents' representatives describe their initiative as pro-consumer.

"We've got to get legislation at the state level that would definitively protect consumers," said Jeff Myers, a spokesman for the Independent Insurance Agents. "There are unique aspects that need to be considered when banks sell insurance."

Banking lobbyists say their adversaries are merely looking for a line of lesser resistance in reaction to the bruising defeats that Congress and the Supreme Court have dealt them in their attempts to rein in banks' insurance powers.

"They're shifting the battle from Washington to state legislatures," said Philip S. Corwin, a principal at Federal Legislative Associates in Washington. A former American Bankers Association lobbyist, Mr. Corwin said the agents' model bill is unnecessary, expensive, and unfair.

"All these provisions are designed so that instead of realizing the synergies and efficiencies of operating as integrated financial entities, banks will be forced to be as inefficient as independent insurance agents," Mr. Corwin said. "The provisions are all premised on the notion that banks are unscrupulous."

The employee restrictions picked up by the Rhode Island legislature would be particularly costly because banks would have to hire new staff specifically to sell insurance products, Mr. Corwin said. But he added that every provision would put banks at a competitive disadvantage against nonbank insurance providers.

Other provisions in the agents' model legislation would:

*Ban discounts on any noninsurance product sold in conjunction with an insurance product.

*Prohibit banks from selling insurance to a customer while a loan application is pending.

*Require insurance activities to be conducted in a "physically separate" part of the bank.

*Prohibit banks from using "nonpublic customer information" to market insurance products. Nonpublic information includes nearly everything except a customer's name, address, and phone number.

*Subject banks that violate these provisions to civil money penalties that could add up to thousands of dollars a day.

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