
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, October 13, 1995                   TAG: 9510130056
SECTION: BUSINESS                    PAGE: B-7   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

BANKERS CRITICIZE BILL THAT WOULD BENEFIT THEM

A COMPROMISE that would restrict expansion into the insurance business has drawn the ire of bank CEOs.

A hard-fought compromise on major changes in the nation's banking laws came under criticism Thursday from an unlikely area: chief executives of three dozen major banks that stand to benefit from most of the proposal.

Executives from Chase Manhattan Corp., BankAmerica Corp. and KeyCorp, in an open letter to House Republican leaders, strongly objected to an aspect of the bill that would restrict banks from expanding into the insurance business.

``This package has taken on the same aspects of anti-consumer, protectionist legislation that it was originally supposed to overcome,'' said the letter to Speaker Newt Gingrich, R-Ga., and other House members.

The letter comes as Republican leaders refine the bill for an upcoming House floor vote. One bank consultant, Bert Ely of Alexandria, Va., said the letter could pose another complication for the sweeping bill.

The proposal would repeal 60-year-old restrictions separating commercial banks from engaging in investment banking activities, such as underwriting stocks.

The bill also would cut regulations, including a key fair lending law, revive the thrift industry's deposit insurance fund and effectively eliminate the savings and loan industry.

The banking industry strongly supports sections of the bill, such as allowing combinations of banks and Wall Street firms.

But these bank executives are upset at language that prevents banks from affiliating with insurance companies, as well as imposing a five-year bar on the Comptroller of the Currency's ability to expand banks' insurance powers.

The insurance industry fiercely opposed an expansion of banks' insurance powers, arguing the large financial institutions would overwhelm small independent agents. House GOP leaders, after extensive attempts to broker a compromise, agreed not to include new insurance powers in the broad bank reform bill.

The decision angered banks, many which already sell an insurance investments in the form of annuities. Banks in small towns also can sell types of life insurance under a loophole in federal bank regulations.

``We believe that passage of this `compromise' package will actually turn the clock backwards on true bank modernization,'' the letter said.

House Banking Committee spokesman David Runkel said the insurance provisions won't be changed, despite objections of the bank executives.

by CNB