Banking Regulation in the United States - 3rd Edition - Hardcover
Banking Regulation in the United States - 3rd Edition - Electronic
A. Banks and the Insurance Business
Banks want to be in the insurance business for reasons similar
to those leading them into securities. It is a mass consumer product.
It is typically purchased after basic food/clothing/shelter needs are
satisfied. While individual purchases differ, they differ within a
narrow range. Insurance can be marketed to the typical bank
customer and sold in bulk with only minor variations among
buyers. Furthermore, insurance often is purchased in conjunction
with other financial products, so the ability to offer insurance to a
customer for CD’s, mutual funds and other investments is an
important marketing tool. In sum, the potential for sales is
enormous, as is the potential for profit.
Bankers believe that the expense of selling insurance as it is
sold is unacceptably high. Independent brokers market their
insurance products in expensive ways: they spend substantial time
with clients and potential clients. They must be paid for their time on
the golf course, and payment is in their commissions on premiums
collected. Banks, with their masses of customers in place and already
doing business, are convinced that they can compress the solicitation
process and still provide the right forms of insurance. They are
prepared to offer appropriate insurance at a much lower cost.
Insurance has, the bankers believe, substantial similarity to
bank deposits. Consumer deposits are generally made over the
course of time in relatively small amounts each. So are insurance
premiums. While insurance payouts are usually not made in the
CHAPTER X-Insurance Activities
A. Banks and the Insurance Business
B. Functional Regulation of Insurance
C. State Regulation of the Insurance Business
D. Central Issue: What Is the Business of Banking?
E. Coercion Risks
F. National Banks as Insurance Principals
G. National Banks as Insurance Agents
1. Results of Barnett
H. National Banks and Credit Insurance
I. Power of State Banks to Offer Insurance
J. FDICIA Limitations on Powers of State Banks
K. Insurance as Closely Related to Banking under
the Bank Holding Company Act
L. GLB Changes in Affiliates' Offerings
M. GLB and Other Federal Preemption
N. Other Aberrations as Banks Do an Insurance
1. What Is Insurance?--Annuities
2. Space Leasing
3. Passive Investments
4. Back-Office Services
5. Sales of Customer Lists
O. Prospects for the Future of Insurance and Banking
Carl Felsenfeld is Professor of Law, Fordham University School of Law, and Former Vice President & Senior Attorney for Consumer and Commercial Financial Activities, Citicorp.
Professor Felsenfeld was a charter member of the Federal Reserve Consumer Advisory Council, Chairman of the American Bar Association Committee on Consumer Financial Services, Advisor to the Commissioners on Uniform State Laws in their project to write an EFI law (Article 4A of the UCC) and a representative to the United Nations Commission on International Trade Law (EFT Model Law and International Insolvency Model Law).
David L. Glass serves as Head of Risk Management Group Legal Affairs for the Americas for the Macquarie Group, a diversified financial services company based in Sydney, Australia. He is also Counsel in the New York office of Arent Fox LLP, where he works in the finance group. He is experienced in advising clients in all aspects of banking and financial regulation. With the Macquarie Group, Mr. Glass advises management regarding the structuring of the Group's US activities and oversees the regulatory relationships of its regulated entities in the United States. David also serves as the Group's anti-money laundering (AML) officer for the Americas and as Director of Compliance for its SEC-registered broker dealer subsidiary.
Prior to working at Macquarie and Arent Fox, Mr. Glass was General Counsel of the New York Bankers Association and practiced with Clifford Chance and Debevoise & Plimpton. He began his career at the Federal Reserve Bank of New York, where at various times he served as a staff attorney, Chief of the Credit Analysis Division, and Assistant to the President. He is currently an adjunct professor of law at New York Law School and Pace University School of Law, where he has taught banking, international banking, payment systems and administrative law. In 2009 he was appointed associate director of New York Law School's newly established Center for Financial Services Law; in this capacity he is assisting in the development of courses and faculty for the school's newly accredited LLM degree in financial services law. Mr. Glass served as Chair of the New York State Bar Association's Business Law Section, and is currently Chair of the Association's Banking Law Committee. He is also a member of the Banking Law Committee of the Association of the Bar of the City of New York and the Panel of Commercial Arbitrators of the American Arbitration Association.