South Dakota Insurance

In”Lassen banks to sell insurance”(edition, June 27) They argue that banks should be allowed in the insurance business and criticize my amendment to close a loophole in federal law would not be that the bank Citibank and other companies sell insurance holding company.

Your basic premise is that the bank, entering the insurance business, competition and thus benefit consumers. I could understand more easily this argument when they are on the automotive industry, where the three biggest automakers have 73 percent of the market in USA. It is much harder to understand when it comes to insure. There are 900 accidents and damage to the USA and 1500 for life insurers active, the first three have 26 per cent of the market.

Their argument is interesting for what they are not, namely the entry of insurers in banking. Is this suggestion unilateral pos-sibly reflect the fact that New York is the nation capital base of banks?

The crucial question is not, however, to protect their interests. This is good public order. For over a century, Congress has waited understood that the greatest risk in the insurance business are incompatible with the need for safety and soundness in the banking system.

They explain that the amendment Dodd würde”leugnen States the power to give, nationally chartered the right banks, brokers or insurance,”but the National Bank Act of 1863 has always refused to national banks these powers, except in the cities or less than 5000 people.

The modification of restrictions on Dodd insurance activities permitted only for public banks, which are connected with the Federal Bank holding companies. It does not impose any restriction on what the public banks that lack the benefits of such membership.

The basis for this distinction lies in a unique position of banks in our society and the Federal Republic role in providing security deposits and regulations to promote safety practices of banks and, finally, the confidence of depositors. These concerns - and avoidance of conflicts of interests in order to avoid unfair competition and the elimination of the possibility of excessive concentration of economic power - Congress has led to the inclusion of a provision of 1982 Constitution banking law, in close collaboration defines insurance activities permitted for bank holding companies.

Before the ink was dry on this document, Citibank and two other major banks in South Dakota encourages legislators to pass a law, Out-of-State holding companies for the purchase of South Dakota about these banks and sell insurance in Germany. Citibank has argued that South Dakota, such an approach, because the Federal Bank Holding Company Act applies only to holding companies, not their bank subsidiaries. For die”South Dakota Schlupfloch”war born, and Citibank preparation for the exportation of jobs west of New York.

The debate in Congress is not whether or not to fill this gap, but how. My amendment, which prevailed in the Senate in 1984 by a 56-38-vote (but did not become law because the House of Representatives has no legislation on banks), would clearly that the companies’ assurance to the bank Holding Company Act restrictions apply to all banks affiliated to the Federal Bank holding companies. This is the only way to achieve the objectives of the law.

Some people have argued that states should be able to grant all the powers they want banks. I accept this notion when it comes purely State creatures. But banks can not have two tracks. After the USA before tax identification number and other benefits of the investment bank Holding Company Act, it is fair and cheap and inexpensive, that they too have their limitations. For spray these restrictions Rock is an element of risk that the Federal Bank of our system of punishment. Christopher J. U.S. Senator Dodd of Connecticut, Washington, June 28, 1985