Pick Reform Targets Carefully, Ludwig Warns

Banks and other businesses that want regulatory relief need to be careful what they ask for, Comptroller of the Currency Eugene A. Ludwig said Monday in Los Angeles.

Mr. Ludwig has been an advocate of reducing regulatory burden on the banks his agency oversees. But in a speech to Town Hall of California, a business group, he said the wholesale deregulation favored by some in Congress could be disastrous.

"All of us who worry about excessive regulation must also be concerned about where limiting essential regulations - which is today's trend - will lead," Mr. Ludwig said. "I am certain that excessive restrictions on regulation today would cause the pendulum toward less burden to come crashing back in the direction of overregulation before too long."

The way to go about regulatory reform, he advised, is very carefully. "It takes careful, almost surgical strikes to get to the heart of the problem and to do the job right," he said.

Mr. Ludwig did not mention by name the banking regulatory relief legislation under consideration by Congress. Instead, he referred broadly to "a mood afoot in Washington that seems to believe that the best way to address the problem of overregulation is to simply tie the government's regulatory process up in knots."

The Comptroller's office, which regulates 3,000 nationally chartered banks, is in the midst of a complete rewriting of its rules and regulations. "Anyone in the banking industry who knows me, knows that I have been deadly serious about eliminating regulatory nonsense and letting the free market work," Mr. Ludwig said.

But, he added, some regulations are necessary to ensure the safety and soundness of banks.

"Every regulatory agency faces the need to make tradeoffs in pursuit of its public purpose," he said. "For my agency, the fundamental tradeoff is quite clear: balance safety and soundness concerns with the need to preserve the national banking system in its role as a vital contributor to the economy of our nation."

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