Comptroller of the Currency Eugene A. Ludwig is under fire again for lobbying against banking legislation.
In a seven-page open letter, House Banking Committee Chairman Jim Leach charged that Mr. Ludwig is violating his duty as a federal regulator by lobbying against pending financial reform.
"All this adds up to an unprecedented and unseemly campaign by a federal regulator to mobilize banks under its regulatory purview against legislation that would affect not only the banks but the regulator's own powers," Rep. Leach wrote.
The Iowa Republican blasted Mr. Ludwig for conducting a conference call with executives of the American Bankers Association on the day before the group voted to oppose the legislation.
A spokeswoman at the Comptroller's Office defended Mr. Ludwig's actions.
"The ABA state executives asked for Gene's analysis of the bill, and he gave it to them," said Leonora S. Cross. "Gene thinks this bill is bad for banks. But he was very careful to say this bill was critical to their future and they should do their own analysis."
Roger M. Beverage, president of the Oklahoma Bankers Association, said he didn't believe Mr. Ludwig's call was inappropriate. "I was glad to have his opinion," he said.
Rep. Leach also accused Mr. Ludwig of misleading Congress by soft- pedaling opposition to pending financial reform in his official statements while privately urging banks to oppose the bill.
Staffers for Rep. Leach argued on Monday that Mr. Ludwig has not been up front with Congress about his opposition to the bill. For instance, his recent complaints about consumer provisions in the bill were not mentioned in his July 17 testimony before the House Commerce Committee.
To pacify consumer groups, Mr. Ludwig also has tried to distance himself from a June 24 agency memo criticizing consumer-protection measures and other provisions in the bill, according to David Runkel, a spokesman for Rep. Leach.
In the memo, Chief Counsel Julie L. Williams argued that the bill's consumer protection provisions would burden banks with "unequal regulatory burdens."
"This memorandum represents Julie's views as my legal adviser," Mr. Ludwig wrote in a July 14 letter to Eugene Kimmelman, co-director of Washington operations for Consumers Unions. "It is not a statement of agency policy."
But the June 24 memo and other agency analyses of the bill have been widely circulated among the banking industry and have helped sway the industry against the bill.
"They circulate these memos attacking the bill to bankers and then tell consumer groups we don't really mean what we're saying," Mr. Runkel said.
Bankers have railed against the consumer provisions, which include requirements that banks offer low-cost checking accounts in order to be eligible to merge with securities or insurance firms and that they determine whether an insurance product is "appropriate" for a particular customer.
"I think a lot of damage was done by the comptroller's attack," added Michelle Meier, government affairs counsel for Consumers Union. "It's shocking to us that a Clinton administration agency would speak disparagingly about consumers having access to the banking system."
Ms. Cross, however, denied that the comptroller opposes the consumer protections. Instead, his aim is to see that they are applied to all financial services providers.
"The consumer protections should apply to everybody and not just focus on banks," she said.
