You also mentioned the mergers involving certain financial institutions, and you pointed to American Express' acquisition of Shearson, Prudential's purchase of Bache, and Sears' merger with Dean Witter. I do not understand how the merger of these non-banking institutions constitutes a reason for allowing commercial banks to sponsor and sell mutual funds. Nor do I understand how these mergers could diminish the market share of small and medium commercial banks. Moreover, I do not believe these mergers have affected them. (To the extent that Shearson-American Express, Prudential-Bache and Sears-Dean Witter offer money market mutual funds any harm caused to depository institutions in the past has been properly redressed by the Garn-St. Germain Act.)

I believe that I and other small securities agencies in Utah have served our communities well in offering competing, although different, financial services and products than those offered by depository institutions. I am convinced that the consuming public benefits by the division of these financial services. The law which has divided these services has not been undermined by the market place, in my view, nearly to the extent you indicated. I believe it would be unfortunate if this division were eliminated wholesale because of the false notion that the securities industry has gotten into the banking business.

I very much appreciate your inviting me to respond to your remarks. I would welcome the opportunity to discuss this matter further with you. If you believe this would be helpful, I would be happy to meet you the next time you are in Salt Lake or I would be pleased to discuss the matter over the phone. I must say I was very pleased that you brought your Committee to Salt Lake to hear local witnesses address these issues. I would encourage you to do it again. If I can be of any further assistance in your consideration of the proposed legislation, do not hesitate to write or call.

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Very truly yours,

Harold Dance

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You asked that I answer your comments of January 16 in writing. I looked over your comments made following my testimony and would like to address the other side of the coin that you mention, but would like to stress the point that I felt was most pivotal in the securities industry's testimony.

Banks have and can exert a tremendous influence over an individual and/or corporate entity. The clout that this industry possesses is enormous. The securities industry, with our entry into levels of the banking category, really do not carry with them any semblance of the power or authority that a bank can exert on a depositor or lender. I agree that an institution like our own would like to be able to provide many and most financial services. Our industry has evidenced that we would do so on a very competitive basis and with excellent results for the ultimate consumer of our services.

We have seen "nonbank banks" spread throughout the country despite the laws barring interstate banking. I realize that Congress is looking at this situation and would legitimitize the nonbanks. The Securities Industry Association looks upon banks that offer discount brokerage services as nonbroker brokers. It looks like the linguists are enjoying the competitive struggle between our financial institutions. Financial papers, periodicals, et cetera have and are carrying articles daily opposing the giant banks moves into their own states. You will recall, I called this backyard competition in my testimony.

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I read yesterday that your counterpart, Fernand St. Germain, Chairman of the House Banking Committee, has now called for precisely what I asked for, a slow down in deregulation to see how it will actually affect the consumer and business entities. Representative St. Germain, in the Wall Street Journal article of March 1, acknowledges a brakes-on attitude for deregulation, "Banks-depository institutions-are not like any other business. They have a unique place in the economy and their money and credit powers give them leverage not matched by any other industry." He may have said it better, but I said it first on January 16, "I'm for a further study period. I'd like Congress to blow the whistle and get on with figuring out what's better. Not better for Citibank or Dean Witter, but better for America."

In conclusion, let me say it was indeed a pleasure to appear before you, and yes, how well I remember you with hair.

Next we have panel 4: Kenneth Osborne, president, Superior Insurance Service, Salt Lake City; State national director, Independent Insurance Agents of Utah; and David Kelly, agent, National Life of Vermont, Salt Lake City; president, Utah State Life Underwriters Association.

Ken, would you like to begin.

[EDITORIAL COMMENT: Whereupon, Mr. Osborne's statement will be inserted into the record with the following changes: (1) The first sentence of the statement is as follows: My name is Kenneth Osborne. I'm an independent insurance agent. Utah is my area of sales. At the present time, I serve as State national director from Utah to the Independent Insurance Agents of America. (2) Page 4. The second sentence in the third paragraph of that page begins, "Congress and Congress alone must determine XXX."]

[Complete statement follows:]

STATEMENT OF KENNETH OSBORNE, PRESIDENT, SUPERIOR INSURANCE
SERVICE, SALT LAKE CITY; STATE NATIONAL DIRECTOR,

INDEPENDENT INSURANCE AGENTS OF UTAH

Mr. Chairman, I am grateful for this opportunity to testify on behalf of insurance agents in Utah, agents who share with their colleagues across the country a deep concern over the direction financial institutions reform will take. And, I don't think it would be presumptuous of me to say that I testify today also on behalf of my clients whose interests, like mine, will be affected in a variety of ways by banking deregulation. In an important way, my clients, and the clients of every insurance agent, are a large part of the missing ingredient in the financial institutions debate: the general public, in whose name and in whose interests many of the proposals before your committee are made. Speaking only from my knowledge of my clients, I can tell you they are less certain of the benefits to them from deregulation than many of the architects of these dramatic revisions in banking seem to be. I have not noticed any angry consumers demanding they be allowed to buy insurance through their bank.

Insurance agents, of course, have long been concerned with the combination of banking and insurance. For about a dozen years in the courts and in congress, insurance agents have argued the case for limiting banks' authority to sell insurance. This effort culminated last year with the enactment of the Garn/St. Germain bank reform bill, Title VI of which for the first time places explicit limits on bank holding company insurance authority.

Congress was persuaded to establish this statutory restriction for both historical and practical reasons. Historically, the separation

between banking and commerce has for 50 years limited most banking institutions' authority to engage in insurance activities.

In this context,

only bank holding companies under the bank holding company act could, at

the Federal Reserve Board's discretion, sidestep this longstanding