SAN DIEGO – Investment banker Peter Duffy said the recent conversion of insurers and investment bank firms to bank and thrift charters is yet another sign that banks enjoy a competitive edge. Duffy's firm, New York-based Sandler O'Neill & Partners, was involved in the recent conversions of Lincoln National and Genworth Financial, although Duffy said he was not personally involved.
But, he did say the two were willing to modify the way they're regulated and chartered in exchange for access to cheaper deposits, more abundant and cheaper capital and better distribution and marketing channels.
"Financial institutions were selling retail investment products, including insurance, to their depositors," he said. "Insurance companies were competing head to head with banks, but they couldn't take in deposits or raise capital like banks could. So, they decided to level the playing field."
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Duffy said credit unions have been asking him about bank charters, because they want to prepare for the possibility of unfavorable regulatory reform.
"Any credit union that knows about the Treasury's blueprint, knows how difficult it is compete in this business, and realizes that unusual things are occurring, like rapid charter changes … if that credit union doesn't at least consider the potential impact to their balance sheet, frankly, they are shirking their duty," he said.
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