Trusts Services

Issue

To promote the offering of trust and fiduciary services by banks.

Position Statement

Through the efforts of the Center for Securities, Trust and Investments, ABA promotes the ability of the bank trust industry to serve its customers. These efforts involve monitoring and reacting to federal and state legislation, as well as regulatory actions and judicial decisions. For example, on the personal trust front ABA follows and contributes to the efforts of the National Conference of Commissioners on Uniform State Laws with respect to laws affecting fiduciary activities, such as the Uniform Trust Code, the Uniform Prudent Investor Act, Uniform Principal and Income Act, and the Uniform Probate Act.

Generally, ABA supports legislative and regulatory changes that would expand the ability of banks to offer all trust services. Similarly, ABA opposes any legislative or regulatory proposals that unwisely limit the ability of banks to offer trust services or impose undue administrative burdens on the institution.  For example, ABA worked with Congress to explain how the financial restructuring legislation, including the creation of the Consumer Financial Protection Agency, would significantly burden bank trust services business and is advocating for legislative changes to alleviate those burdens.

ABA's advocacy efforts also include responding to judicial decisions that would expand liability for the limited scope of responsibilities undertaken by corporate trustees.  These advocacy efforts often involve educating relevant parties about the unique role of corporate trustees in the issuance of corporate and municipal debt.

Explanation

New uniform state laws or amendments to existing laws can have a profound effect on the activities of institutional trustees by either limiting or expanding their fiduciary powers or legal liability. Likewise, the IRS's proposed rule that would require an "unbundling" of the trust fee not only ignores the fiduciary obligations of trustees, but also places an enormous administrative burden on bank trust departments to comply with its mandates.

Promoting and advocating for these business lines is important to the overall financial strength of the banking industry. Banks have offered personal trust services for over a hundred years and are considered to be trusted and reliable corporate fiduciaries for all types of clients. Banks have also long engaged in corporate trust activities on behalf of capital markets clients that include both bond trustee services as well as securities processing services. These business lines bring in desirable fee-based income to the institution and often lead to additional business opportunities for other areas of the bank, while providing high quality, efficient services for banking clients.

Contact for further information: Cecelia Calaby (202) 663-5325; Cristeena Naser (202) 663-5332; Phoebe Papageorgiou (202) 663-5053.