September 1, 2004
Thrivent Financial Bank is a federal savings bank regulated by the Office of Thrift Supervision, and is also a SEC-registered investment adviser.
Thrivent Financial Bank respectfully takes exception to the Commissions failure, in its current proposal, to extend to thrifts the proposed general custody exemption in Exchange Act Rule 760, the proposed ERISA exemption in Exchange Act Rule 770 and the proposed Regulation S exemption in Exchange Act Rule 771.
The Commissions stated rationale for not extending those exemptions to thrifts is that it was unable to determine whether or not thrifts currently engage in the types of securities activities covered by those exemptions. If that were a fair and rational basis for distinguishing among the universe of banks covered by the proposed regulations, logical consistency would require that the Rule 760, 770 and 771 exemptions also be denied to all national and state banks which are not in fact currently conducting the activities covered by these exemptions including all national and state banks chartered in the future.
While Thrivent Financial Bank strongly disagrees with the logic of arbitrarily imposing any structural regulatory distinction which grants an ongoing competitive advantage based upon historical accident, in point of fact thrift institutions do engage in at least some lines of business which would be impacted by these proposed exemptions. Thrivent Financial Bank currently maintains approximately 100 custody accounts for individuals and entities. Failure to extend the proposed general custody exemption in Exchange Act Rule 760 to thrifts would apparently leave the Bank unable to provide services for those custody account customers which all other banks will be able to offer to their pre-cut off date custody account customers.
Thrivent Financial Bank also currently acts as the custodian for most IRA and other participant directed tax-deferred accounts established by individuals and certain employers with the Thrivent Mutual Funds. This is a business function which banks routinely provide with respect to mutual funds. Failure to extend the proposed ERISA exemption in Exchange Act Rule 770 to thrifts might effectively force the Bank to discontinue this business and be replaced by a non-thrift bank.
The Commission has offered no substantive reason why non-thrift banks should be permitted exemptions from broker registration which are not available to thrifts, and Thrivent Financial Bank respectfully urges the Commission to reconsider its proposal to deny thrifts the Rule 760, 770 and 771 exemptions