When NationsBank Corp. put the "NationsFunds" label on its mutual funds 18 months ago, regulators and lawmakers barely blinked.
Since then, however, the question of whether banks may use their corporate names on funds has flared into controversy.
At issue is the potential for customer confusion. As consumers shift savingse from insured deposits to mutual funds, policymakers are concerned that savers may not grasp the risks.
"Two different kinds of products are being sold under one name - that's a potential problem," said Bert Ely of Ely & Co., Alexandria, Va.
Though a battery of financial regulatory agencies have weightede in with guidelines for naming funds, the line between what's all right and what's not is still somewhat vague.
The Office of the Comptroller of the Currency, for instance, urgede banks last April to avoid using their corporate monikers on mutual finds, saying customers might be confused.
But so far the agency hasn't blocked any banks from changing names, nor has it asked any banks that have renamed their funds to switch back.
Fed Prohibition
The Federal Reserve Board has taken a tougher stance, prohibiting banks under its jurisdiction from using corporate names on mutual funds. But fewe Fed-regulated banks manage funds.
The Securities and Exchange Commissiion has identified 42 banksw that have incorporated some version of the bank name into their mutual fund families.
In May, the SEC ruled that such like-sounding names are "presumptively misleading," but added that banks can overcome the problem by sticking a label on fund prospectuses that explains how mutual funds differ from deposits.
Now members of Congress are taking a closer look. A bill introduced recently by two senior House Banking Committee members would prohibit banks from giving their mutual funds names that are similar or identical to the bank's name.
