Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, October 6, 1993 TAG: 9310060076
SECTION: BUSINESS PAGE: C4 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Sen. Donald Riegle, D-Mich., chairman of the Senate Banking Committee, said Tuesday his committee will vote next month on legislation dealing with interstate banking and the insurance powers of banks.
Both issues were addressed in comprehensive banking legislation that was pushed hard by the Bush administration in 1991 but never enacted. A version passed the Senate, but was ensnarled in the House by competing financial industry interests.
Now there is a new administration and a new Congress and it is time to revisit the issues, said Riegle.
At a hearing of his panel Tuesday, three top regulators endorsed permitting banks to sell insurance. Comptroller of the Currency Eugene Ludwig, Federal Deposit Insurance Corp. acting Chairman Andrew C. Hove Jr. and Federal Reserve Board member John P. LaWare all said selling insurance was a safe activity for banks.
"The sale of insurance poses very little risk to . . . banks, certainly less than involved in lending," Ludwig said.
Both Hove and LaWare, whose agencies are independent of the administration, also endorsed relaxing interstate banking restrictions. Ludwig, whose agency is part of the Treasury Department, said the administration would explain its views at a hearing Nov. 2.
The Clinton administration hasn't formally adopted a position on interstate banking. But senior Treasury officials have said they are leaning toward its expansion if a way can be found to protect small community banks from suffering an undue disadvantage in competition from big banks.
All states except Hawaii permit some form of interstate banking. But it must be done through a holding company, not just by opening a branch office, and the states impose various conditions.
Consultants estimate the banking industry could save as much $10 billion a year if the interstate laws were less restrictive.
As a starting point for legislative work, Riegle intends to use the 1991 Senate banking bill, which lifts the barriers to interstate banking but permits state legislatures to vote to opt out of the system.
However, that bill also tightened some regulatory loopholes that have allowed some banks to sell insurance, particularly one that lets banks with offices in small towns sell insurance nationwide.
by CNB