House of Representatives has passed H.R. 10, which will tear down the Glass-Steagall walls separating banking, insurance, T and equities.
It was a narrow victory, with the bill passing by only one vote. But it was a big defeat for bankers who sell insurance. They worked in vain to remove some troublesome provisions and amendments from the final bill.
For one thing, bankers soon may have to disclose, to consumers, commissions and fees for products sold by a newly created kind of bank holding company.
The House has passed a bill tearing down the walls separating banking, insurance, and equities.
More disclosure on the horizon
"The bill required that federal regulators review the consumer fee disclosures-the ones that financial institutions affiliated with this new form of bank holding company would have to provide to customers," said Chrys Lemon, a banking attorney with The McIntyre Law Firm (Washington, DC). Prior to the vote, Lemon explained what this would mean for banks.
"Basically, you would have to disclose any cost that went into a particular banking product," Lemon told us, "including any fees, markups or other costs, and commissions. So it's a pretty heavy disclosure requirement that would be placed on any type of an entity that was involved in this newly formed holding company.
"It says that for any entity selling a product, if that entity is regulated by a federal agency-such as the SEC, or the FDIC, or the OCC, or the Federal Reserve-any banking related or financial product sold would have to have these disclosures to consumers."
However, Lemon said that this would put banks at a disadvantage. "What this would appear to exempt," he explained, "would be, for example, independent insurance agents-who are not regulated by any type of a federal entity. They would not have to provide those disclosures. So it would not be, really, a level playing field." Can this man tame the annuity paperwork dinosaur? Fine tuning your product mix
News & Views