Bliley Calls Off Insurance Talks On Bank Reform Bill
WASHINGTON (AP) _ Extensive negotiations to permit banks to affiliate with insurance companies have collapsed, the chairman of the House Commerce Committee said, casting uncertainty over a major bank reform bill.
Rep. Thomas J. Bliley Jr., R-Va., had spearheaded talks in recent days to resolve the central dispute in a major bank reform bill moving through the House: whether banks could expand further into the insurance field.
``The parties are too far apart, and their commitment to their respective positions too firmly held, for such an approach to succeed at present,″ Bliley said Thursday.
Bliley, speaking as two House Commerce subcommittees resumed hearings the bank reform bill, said continuing the bank and insurance talks ``would only jeopardize this window of opportunity to enact historic legislation modernizing our financial services industries.″
But industry analysts say lack of an insurance compromise could only complicate the bill’s prospects and intensify the battle between the bank and insurance lobbies.
``It really draws the battle line between the banking industry and the insurance agents,″ said Bert Ely, an Alexandria, Va.-based bank consultant.
The Commerce subcommittees are considering a bill, sponsored by House Banking Committee Chairman James Leach, R-Iowa, that would repeal laws separating Wall Street firms and commercial banks. The bill passed the House Banking Committee last month.
It would streamline regulation for these new hybrid financial institutions, which could offer mutual funds, checking accounts, stock and bond underwriting and investment banking services under one roof. Bankers say they can’t compete effectively under existing laws, written in aftermath of the Depression, particularly against non-banking companies that issue credit cards and home mortgages without the burdensome bank regulations.
The insurance lobby objects to Leach bill because it doesn’t reign in the office of the comptroller of the currency, which regulates national banks and has allowed them to sell insurance and annuities.
Bliley and Rep. John Dingell, D-Mich., sponsored a bill to fix that problem by having all insurance activities regulated at the state level. Insurance agents argued the bill was needed to ensure a level playing field with banks, while the banking industry doesn’t want any restrictions on its existing insurance powers.
Ely said Bliley’s announcement means ``banks are just getting blown out of the water″ because they haven’t obtained federal pre-emption of state regulations. Drew Pfirrman, senior vice president of New England’s biggest banking company, Fleet Financial Group, said state-by-state insurance regulation would undermine the goals to streamline regulation for banks.
It’s unclear if the banking industry will attempt to block the Leach bill because they didn’t win federal pre-emption. Scott Jones, a Minnesota banker testifying on behalf of the American Bankers Association, urged the committee to adopt the Leach bill without amendments that would restrict banks’ existing insurance powers.