Comptroller of the Currency Eugene A. Ludwig argued Thursday that barring banks from engaging in new activities directly would harm community reinvestment.

"Anyone with a stake in community development should have concerns about proposals for financial modernization that would allow new activities only within holding company affiliates," Mr. Ludwig told the National Council for Urban Economic Development.

Income earned from direct subsidiaries allows the parent bank to make more community development loans, he explained.

Also on Thursday, the OCC issued an advisory letter clarifying how national banks may invest in community development securities.

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