Your Nov. 11 editorial titled “New party label, same old politics” misses the mark regarding repeal of Glass-Stegall and banks selling insurance.
Support exists to keep banks from selling insurance because consumers do not want any more economic power concentrated in ever-growing, faceless banks, especially where intimidation to buy the insurance is tied to loan transactions. Even community banks want the big banks kept out of the insurance business.
You seem to imply that banks have a right to be in the insurance business “so they could be more competitive and financially stable.” I believe we should question why banks aren’t competitive and financially stable in the business of banking before greasing the skids for them to enter the insurance business.
Insurance agents do not fear competition. They do, however, want competition on a level playing field. Banks already have significant financial information on customers, including life-insurance information and information on homeowner’s, auto, commercial real estate and liability coverage. They know who the carriers are, the premium charged and policy expiration dates. They want desperately to be able to share that confidential information with newly created bank insurance marketing departments to wipe out competition and develop a new line of income.
That’s why they are willing to try to defeat a bill that gives them reforms they have sought for 40 or 50 years, including the ability to sell securities. Their goal is to dominate insurance sales and eventually bypass the carriers and underwrite the insurance themselves. Wouldn’t that be fun when we have another Continental or Barings or Daiwa disaster on our hands? Newt Gingrich wants to keep banks out of the insurance business because he knows it would not be good for consumers to have them in the business. The people agree. That’s why he has more votes for his plan than the bankers do for theirs. I don’t see this as cutting deals for friends or lining the pockets of special interests. I see it as grass-roots democracy at its finest.
