A Chance to Break out of the Mold

Bankers have been focused on trying to win financial modernization legislation for so many years--decades, in fact--that it's possible some of us may have forgotten what we want to do with it when we get it. It's too early, as of this writing, to know whether Congress has passed the legislation and if the President has signed it. Even if we don't finalize a bill this summer, there is still a reasonable chance that the 106th Congress could pass financial modernization legislation. We won't give up. Let me express a personal view from the perspective of a community banker. I believe that the financial modernization legislation that Congress has been debating for more than a year has the potential to create very solid opportunities for community bankers who are looking for new ways to serve their customers, expand services, and improve the bottom line. We need a bill to be able to offer new products and services and meet the changing needs of our customers. More than a decade ago, our bank in Red Wing, Minn., population 16,000, wanted to be more competitive in the annuities business. We couldn't offer the product, however, and the result was that some of our customers turned away from the bank. So we got busy. Our bank applied to the Office of the Comptroller of the Currency for permission to sell annuities, and I'm proud to say that we got that permission, though it took two years. The move improved our ability to serve our customers and support the Red Wing community. But it shouldn't take two years of filling out paperwork and completing applications for a community bank to be able to offer financial products as logical as an annuity. We can't wait two years to be competitive. Speaking earlier this year in St. Louis, Federal Reserve Governor Laurence H. Meyer described the forces driving the financial modernization effort. He said: For so long, it seems, we lived in a world in which we had our checking account at a bank, our mortgage at the S&L, bought our insurance from an independent agent, and our stocks from a broker. If we were lucky enough to have a little extra, we bought other assets and investments from other specialists, and hardly ever thought of breaking out of the traditional mold. Now we have an opportunity to break out of that mold, and it's long overdue. Financial modernization has the potential to bring new sources of revenue and a tearing down of old barriers that prevented us from tapping those sources in the past. …