The State Farm Insurance Bank is in a turf war, which pits North Carolina regulators against the federal Office of Thrift Supervision to determine who has jurisdiction over State Farm’s sale of $100,000-plus “Jumbo CDs.” In the meantime, State Farm continues to sell the CDs in South Carolina.
State Farm entered the banking arena in 1999. It now has 355 agents in North Carolina and 244 in South Carolina. It decided to sell banking products when many banks are entering the insurance business.
The dispute revolves around if State Farm can legally sell securities in 18 states and under whose jurisdiction such sales fall–it has 16,000 agents nationwide selling the CDs. Regulators contend it must follow their banking product regulations.
State Farm argues it should be monitored only by the OTS, which regulates thrifts and savings and loans and OTS agreed in an opinion in October.
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