John D. Hawke Jr. received bipartisan support at his confirmation hearing Wednesday, but concerns over his support of the Community Reinvestment Act could delay a final vote on his nomination to be comptroller of the currency.
Senate Banking Committee Chairman Alfonse M. D'Amato said he respects Mr. Hawke's "integrity" and "forthrightness."
"I can't think of anyone better to lead this agency," said Sen. Jack Reed, D-R.I.
House Banking Committee Chairman Jim Leach introduced Mr. Hawke and said he has served with "great distinction" as Treasury under secretary for domestic finance since June 1995.
But Sen. Richard C. Shelby, R-Ala., said he was "deeply troubled" by Mr. Hawke's support of the CRA and vowed to send the nominee a series of questions on the reinvestment law.
Mr. Hawke pledged to continue enforcing the agency's crackdown on deteriorating lending standards, insisting that banks maintain strong internal controls, and forcing banks to prepare for the millennium computer bug.
"The first priority for any comptroller must be to ensure the continued safety and soundness of the banking system," he said.
Little of the brief hearing was devoted to financial reform legislation, which Mr. Hawke has pushed vigorously. A new wrinkle in the bill emerged Tuesday as the Office of the Comptroller of the Currency, Office of Thrift Supervision, and Federal Deposit Insurance Corp. complained about a provision that would prevent them from examining nonbank subsidiaries, like broker-dealers, of bank holding companies.
Raising the specter of the 1980s thrift crisis, the OCC and OTS said in a joint letter to Sen. D'Amato that the authority to examine nonbank subsidiaries is "fundamental to prudent oversight" and should not be curtailed.
The provision, found in section 118 of the House bill, would ban on-site exams of nonbanking units by the OCC, OTS, and FDIC unless the agencies could show that the subsidiary poses a "material" risk to the health of the bank or that they have "reasonable cause" to believe the unit is violating the law.
"We would essentially be forced to wait until a danger or violation materializes before we could act," the OCC and OTS said in their letter. "Section 118 thus would take away from regulators one of their most important tools for ensuring safety and soundness: the ability to act promptly."
