The Honorable Eugene A. Ludwig
Comptroller of the Currency
250 E Street, S.W.
Washington, D.C. 20530

Re: Docket No. 97-01, 62 FR 1950 (January 14, 1997)
Preemption Determination

Dear Comptroller Ludwig:

We are writing in response to the above-referenced request for written comments on whether the "Financial Institution Insurance Sales Act," recently enacted by the State of Rhode Island, should be preempted by Section 92 of the National Bank Act.

The Act does not prevent banks from selling insurance. The Rhode Island State legislature passed this Act to remove Rhode Island's statutory ban on the sale of insurance by state-chartered banks. The legislation also is a valid exercise of that State's right to regulate the business of insurance by protecting consumers from unfair trade practices and providing a level playing field for all sellers of insurance products. For example, section 6 of the bill prohibits the illegal tying of the sale of an insurance product to the extension of credit and section 7 of the bill requires disclosure to consumers that an insurance product is not a deposit and is not federally insured. This legislation is the result of extensive negotiations with representatives of Rhode Island's federally-chartered and state-chartered banks.

The public has a substantial interest in the continued functional regulation of insurance by the States, regardless of who is conducting the activities. We support the principles of State's rights, functional regulation, and fair and reasonable consumer protection. We support the Rhode Island law and believe that it meets the standard established by the decision in Barnett Bank v. Nelson 116 S.Ct. 1103 (1996).

The Act authorizes the Department of Business Regulation's commissioner of banking to promulgate regulations to implement the sale of insurance under the Act and "to ensure the safety and soundness of the banking and insurance business." Your notice and request for comment makes no mention of the implementing regulations drafted by the Rhode Island Department of Business Regulation and that are pending a February 10, 1997 hearing before that Department and possible further revisions before finalization. As legislators we are outraged at your efforts to usurp the authority and subvert the processes of an elected State legislature that is engaged in valid lawmaking.

We strongly urge you not to act to preempt the Rhode Island Financial Institution Insurance Sales Act.

Sincerely,

JOHN D. DINGELL
EDWARD J. MARKEY
TIM HOLDEN
JOHN S. TANNER
EARL POMEROY
GARY CONDIT
BOBBY RUSH
RON KLINK
COLLIN C. PETERSON
ANNA G. ESHOO
DAVID MINGE
GENE GREEN

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