Bankers may be moving into the mutual fund business, but at heart they're still bankers. And if there's one thing bankers hate, it's the prospect of more regulation.

That's why banking trade group executives went on the offensive last week, pledging at a Washington news conference to develop standards of industry practice for banks that sell mutual funds.

By adopting their own self-regulatory approach, the bankers hope to head off a paperwork nightmare akin to the home mortgage process.

In mutual funds, the big issue is whether banks are adequately disclosing the risks consumers face. The investments, after all, aren't covered by federal deposit insurance.

Banks insist that they can come up with adequate disclosures without any help from regulators. In fact, they say, piling on more requirements may only cloud the issue further for consumers.

So instead of handing consumers thicker prospectuses and of disclosure forms, the banking associations want to develop a one-page form on investment risks. Customers would sign the forms to acknowledge that they understand how mutual funds differ from deposits, and how any fees or penalties work.

By taking a less-is-more approach to disclosure, the trade groups hope to come up with a form that consumers will actually read and understand.

"We want to ensure that bank customers have the very best information available" about their investments, said Donald G. Ogilvie, executive vice president of the American Bankers Association.

That, he added, means coming up with something much more readable than a mutual fund prospectus, the standard fund-industry disclosure document, which is notoriously dense and full of legalese.

Joining the ABA in crafting the industry guidelines are the Association of Reserve City Bankers, the Consumer Bankers Association, the Independent Bankers Association of America, the National Bankers Association, and the Saving Community Bankers of America.

The banking industry's apparent enthusiasm for mutual funds is shared by most of its trade group leaders. But not Kenneth A. Guenther, the IBAA's executive vice president.

At the news conference, Mr. Guenther said he sees the surge in mutual funds as simply a defensive strategy for community banks -- not a core piece of their business.

"No one is going to be promoted in a community bank for helping to drain away core deposits," Mr. Guenther said.

Nevertheless, he doesn't think deposits will stop flowing from banks into mutual funds anytime soon. "By the end of this year, there could be more consumer savings in mutual funds than in banks," Mr. Guenther said.

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