NR 98-12
January 30, 1998

WASHINGTON, DC -- Comptroller of the Currency Eugene A. Ludwig
asked bank, thrift and credit union regulators January 26 to
consider whether the interagency guidelines on nondeposit
investment products should be converted into regulations.

Mr. Ludwig also asked the four agencies to consider whether
insurance sales activities by banks should be brought within
uniform interagency standards.   

Mr. Ludwig said in his letter that it is an appropriate time to
consider a regulation because the agencies now have several
years of experience in working with the guidelines. The
interagency guidelines, which were adopted on February 15, 1994,
set out standards for banks that sell investment products,
including disclosures that such products are not insured by the
FDIC or guaranteed by the bank.

The letter went to the members of the Federal Financial
Institutions Examinations Council, an umbrella organization
whose members include the OCC, the Federal Reserve Board, the
Federal Deposit Insurance Corporation, the Office of Thrift
Supervision and the National Credit Union Administration.  Mr.
Ludwig currently chairs the FFIEC.

A copy of the Comptroller's letter is attached.

                              ###



The OCC charters, regulates and supervises approximately 2,600 national banks
and 66 federal branches and agencies of foreign banks in the U.S., accounting
for more than 56 percent of the nation's banking assets.  Its mission is to
ensure a safe, sound and competitive national banking system that supports
the citizens, communities and economy of the United States. 

January 26, 1998


The Honorable Susan M. Phillips              The Honorable Andrew C. Hove
Vice Chair                              Acting Chairman
Board of Governors of the Federal            Federal Deposit Insurance
    Reserve System                         Corporation
20th and C Streets, N.W.                550 17th Street, N.W.
Washington, D.C.  20551                 Washington, D.C.   20429

The Honorable Ellen S. Seidman               The Honorable Norman E.
                                             D'Amours
Director                           Chairman  
Office of Thrift Supervision                 National Credit Union
                                             Administration 
1700 G Street, N.W.                     1775 Duke Street    
Washington, D.C.  20552                 Alexandria, Virginia 22314    

Dear FFIEC Members:

I am writing to recommend that the FFIEC consider initiating an interagency
effort to reevaluate the Interagency Statement on Retail Sales of
Nondeposit Investment Products (February 15, 1994) ("Interagency
Statement").  Our review of this area may be appropriate at this time based
on our several years of experience with the Interagency Statement, and in
light of the recently adopted rule of the National Association of
Securities Dealers ("NASD") which specifies requirements applicable to
broker-dealers operating on the premises of  financial institutions (NASD
Notice to Members 97-89, December 1997) ("NASD Rule").

At the time we adopted the Interagency Statement, retail sales of
nondeposit investment products through financial institutions was a
relatively new activity that merited the flexibility afforded by the
Interagency Statement as the activity evolved.  Now that the agencies have
had more experience supervising these activities, and the NASD has included
provisions from the Interagency Statement in its Rule, it may be timely for
us to consider whether parts of the Interagency Statement should be
modified or adopted as a uniform interagency regulation.

I also want to raise another related issue with you.  As you know,
financial institutions are becoming increasingly involved with selling
insurance products. This expanding activity raises a variety of regulatory
issues, including some of the same types of disclosure and customer
protection issues that are addressed by the Interagency Statement.  Our
review of this area could reasonably include consideration of whether
insurance sales activities by financial institutions should be brought
within our uniform interagency standards.  

In considering these issues, we need to be mindful of the wide variety of
financial institutions involved in providing these investment and insurance
products.  We also need to ensure that effective disclosures are provided
to financial institutions' customers, particularly regarding the lack of
federal deposit insurance coverage. Our concern with promoting the best
interests of financial institutions' customers in connection with these
activities must be reflected in any new initiatives.      

Our agencies have coordinated effectively in establishing standards for
sales of nondeposit investment products through financial institutions.  I
look forward to our continued cooperation on these important issues and
welcome your views on this proposed FFIEC initiative.

Sincerely,



Eugene A. Ludwig
Comptroller of the Currency


cc:  Joe M. Cleaver, Executive Secretary, FFIEC