Shock-waves from the repeal of the Glass-Steagal Act are being felt in Minnesota. Flush with new-found freedom,
ReliaStar Financial is forming a national trust bank.
The Glass-Steagal Act, enacted after the Great Depression, erected walls between various sectors of the financial services industry. As a result, an insurance company like ReliaStar was prohibited from going into the banking business. All that changed with the passage of the Financial Services Modernization Act of 1999, which tore down those walls.
ReliaStar Financial is the first entity to use this newfound freedom to expand, according to the company, (although Charles Schwab might disagree with its recent acquisition of US Trust) and the ReliaStar National Trust Bank is the result. Although free to pursue any area of business, ReliaStar has chosen to limit the new venture to the exercise of fiduciary powers over personal trust accounts.
ReliaStar may be venturing into uncharted waters, but it's not worried about the legal niceties. The Office of the Comptroller of the Currency, a division of the Department of the Treasury, has been scrutinizing the venture. "We don't expect any legal problems," said
Patrick Marzol, president and CEO of ReliaStar National Trust Company. They better not -- the bank opens for business today.
"We intend to use ReliaStar's existing national distribution network to access customers," said Marzol. That network includes
ReliaStar Bank,
PrimeVest Financial Services, independent insurance agents, and
Washington Square Securities, a ReliaStar affiliate.
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