July 16, 2001

Jonathan G. Katz
Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549-0106

Re: SEC Bank Broker-Dealer Interim Final Rules (Release File No. S7-12-01)

Dear Mr. Katz:

Zions Bancorporation ("Zions") appreciates the opportunity to provide comments on the Interim Final Rules ("Interim Rules") issued by the Securities and Exchange Commission (the "Commission") regarding the "push-out" provision of the Gramm-Leach-Bliley Act ("GLB Act"). We believe that there are significant problems with a number of the provisions of the Interim Rules, and that they are contrary to the plain language of the GLB Act and its legislative history in critical ways.  More fundamentally, we believe that they undermine the role of the trustee as fiduciary at the very time that millions of Americans are reaching retirement age, and are turning to bank trust department as the trustees for their families.

Just as an emergency room is a critical function in a hospital, the trust department of a bank is the place, historically, that comforts and protects widows, widowers, orphans, and young family members. We stand in the shoes of the mother or father who created the trust for their families. We undertake a long-term responsibility to handle funds entrusted to us, with a fiduciary's duty of care.  Basic facets of that duty are our responsibilities to protect our charges, and not to self-deal. Under the federal regulatory umbrella, these duties are appropriately being examined by the OCC, the FDIC, and the OTS. That is because we step in to act for our customer, as the trust or other instrument dictates. By state law, we are often the protector for the beneficiaries. In that sense, the SEC's proposed rules make an incorrect assumption - that no one is looking out for the individual's interests.

Additionally, we have reviewed the June 29, 2001 comments presented to you jointly by the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency ("banking agencies"), and fully support their position in this matter.  The following is a brief discussion of what we consider to be the most significant problems associated with the Interim Rules, including a reiteration of some of the concerns expressed by the banking agencies.

Our primary concern surrounds the difficulties involved in transferring, or "pushing out," trust accounts from the bank's trust department to an affiliated broker-dealer. This includes the time and money involved in changing legal documentation; obtaining necessary regulatory approvals; altering business processes, including operating policies and procedures and reporting relationships; adapting control structures; amending appropriate books; obtaining necessary employee licenses; and much more - not to mention the considerable disruption to the client. We have established long relationships with our trust clients, relationships developed over several years and, in some cases, generations. If the Interim Rules force trust activities out of the bank, clients will be forced into fragmented relationships with their chosen trustee and a third-party broker-dealer, and be burdened with additional costs that are entirely unnecessary.

A second concern arises in light of the unduly narrow limits on compensation a bank can receive from its trust and fiduciary accounts under the Interim Rules. The onerous task of calculating and proving to your satisfaction the "chiefly compensated" qualifications on an account-by-account basis is overly burdensome. Analyzing each of our accounts annually would bring extraordinary costs to bear on our organization, not to mention the amount of manpower that would be necessary to accomplish this. We would propose that, as the language of the GLB Act and its legislative history suggest, the term "chiefly compensated" be applied on an aggregate basis to the bank's trust department and not to each individual account.

The excruciatingly narrow definition of "fiduciary" in the Interim Rules creates another concern. Acting in a fiduciary capacity involves much more than having a state statute that imposes a duty of loyalty. This is clearly evidenced by the surcharges levied against banks and others for failing to professionally perform all the duties expected of a "fiduciary" as it is known in common law and case law. In fact, "trust powers" are granted to each bank based on their ability to provide highly sophisticated and qualified trust experience to its trust clients. "Pushing out" trust accounts to an affiliated broker-dealer would clearly circumvent this protection to clients who have developed highly sophisticated trust plans within the bank's trust department.

In recent years, the trust industry has diligently sought to reduce the cost of doing business in relation to the amount of compensation charged to the client. The Interim Rules will necessitate an increase in client fees to maintain high service levels, once again hurting families.

Finally, we noted that one of the exceptions is that trust departments be regulated. As a national bank, we are regulated by the Office of the Comptroller of the Currently ("OCC"). Yet this is not a singular exclusion - it is combined with the provision that we be chiefly compensated. Again, the definition of "chiefly compensated" requires that we review each of our accounts individually.

We truly believe that the products and services we offer in Trust, which are closely regulated by the OCC, should continue to be available for any individual. As an industry we have worked hard over the years to consolidate our industry and find ways to contain trust fees.  The "push-out" provisions are very damaging to the economics of running trust departments, and will have an adverse effect on those individuals that have been well served by trust departments over the years.

Given what we believe to be critical flaws in the Interim Rules, we strongly urge the Commission to take immediate steps to formally treat the Interim Rules as proposed rules, and to allow the time necessary to address the concerns we have outlined in this letter. We additionally ask the Commission to extend the effective date of the GLB Act's "push-out" provisions until after the proposed rules are issued as final rules. And lastly, we believe that at least a one-year transition period should be provided for banks to bring their operations into compliance once the revised rules become final.

Thank you again for the opportunity to provide comments, and for considering our comments. We would be happy to make ourselves available to assist you as you address our concerns, in an effort to develop rules that are consistent with both the spirit and language of the GLB Act and sound fiduciary principles.


W. David Hemingway
Chief Financial Officer
Zions Bancorporation