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IBAA SUPPORTS CONVERSION OF COMMON TRUST FUNDS INTO MUTUAL FUNDS

 WASHINGTON, June 17 /PRNewswire/ -- The Independent Bankers Association of America (IBAA) today urged Congress to permit tax-free conversion of common trust fund assets into mutual funds, allowing community banks to offer the same mutual fund-related services as larger banks.
 In testimony prepared for a House Ways and Means subcommittee, IBAA President James R. Lauffer called on members to broaden section 623 of H.R. 13 to allow for conversion of common trust fund assets to two or more mutual funds. The initial proposal, contained in the 1992 tax bill, allowed for conversion to one mutual fund.
 Many large banks already have sufficient assets in their common trust funds to establish a single diversified proprietary mutual fund that would be profitable from the start, Lauffer said. In contrast, community banks do not ordinarily administer common trust funds in the $50 million to $100 million category. Therefore, they do not have the "critical mass" to set up their own proprietary mutual funds.
 The tax-free conversions also would benefit trust participants and other community bank customers, since a greater range of financial products would be available for them.
 "We feel a responsibility in servicing customers in smaller communities where there may be no other financial institutions," said Lauffer, chairman/president/CEO of First National Bank of Herminie, Irwin, Pa.
 IBAA is the only national trade association that exclusively represents the interests of the nation's community banks.
 -0- 6/17/93
 /CONTACT: Herb Spira of the Independent Bankers Association of America, 202-659-8111/


CO: Independent Bankers Association of America ST: District of Columbia IN: FIN SU:

KD-MH -- DC014 -- 3057 06/17/93 11:58 EDT
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Publication:PR Newswire
Date:Jun 17, 1993
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