Senate Approves a Compromise On Banks' Insurance Brokerage
WASHINGTON -- The Senate approved a compromise amendment Thursday that would appear to preserve Delaware's status as a haven for nationwide insurance brokering by banks.
Although the House version of the same bill has a provision barring bank insurance underwriting, that chamber does not address brokerage, or sales.
As a result, while the fate of the Senate bill remained in doubt, the bill ultimately forwarded for the President's signature will likely protect brokerage activities.
Passage Seems Assured
Because the banking bill must be passed to recapitalize the Bank Insurance Fund, most observers believe it is all but certain that some version of the legislation will pass Congress this year. Both the House and Senate versions would make at least $70 billion available.
The House took up the banking bill late Thursday afternoon. Democratic leaders, including Speaker Thomas S. Foley, D-Wash., and majority whip David Bonior, D-Mich., were flatly predicting victory.
The Senate vote was a victory for banks and at least a partial setback for the Independent Insurance Agents of America and its allies. The bill that was reported out of the Senate Banking Committee would have shut down both Delaware and small towns as launching pads for bank insurance products.
In the Senate compromise, the insurance agents were still able to achieve one priority - a roll-back of regulatory actions that have opened the door for banks to market insurance nationwide from towns of under 5,000. But a "parity" provision in the measure would permit national banks to exercise whatever insurance powers were authorized for state-chartered institutions.
Edward L. Yingling, head of government relations for the American Bankers Association, described the insurance provisions developing in the Senate as a mixed bag for the industry. "The |towns of 5,000' is a problem," he said. "But the parity measure is a plus."
Paul Equale, chief lobbyist for the Independent Insurance Agents, said his organization is "very supportive" of the Senate compromise, but declined further comment.