WASHINGTON -- Comptroller of the Currency Robert L. Clarke rose to his own defense Thursday, telling the Senate Banking Committee that despite difficult circumstances, his team had "gotten the job done."
In fighting for confirmation for his second term as comptroller, Mr. Clarke responded to questions from Democratic committee members who charged that he had relaxed policies on real estate loans, reduced the number of examinations, and relied heavily on monitoring banks without going into the institutions.
Riegle on the Attack
"The bankers found you to be a very accommodating regulator, providing them with the lax standards some bankers wanted," said the banking committee's chairman, Sen. Donald Riegle, D-Mich. "When those policies later helped produce the greatest wave of bank collapses in history, you finally swung to the other extreme and turned yourself into the self-described regulator from hell."
"The facts simply do not support those allegations," retorted Mr. Clarke. "I disagree very strongly with your characterization of the OCC's supervision since I have been comptroller of the currency." Mr. Clarke pointed out that the frequency of examinations under his tenure had increased, not decreased.
Sen. Jim Sasser, D-Tenn. charged that Mr. Clarke espoused monitoring banks by computer off-site, rather than going into the institutions and looking over the books. This was one reason, the Democrats charged, that from 1986 to 1990 banks regulated by the agency in Texas lost an estimated $10.3 billion, representing 50% of the Bank Insurance Fund's losses.
Garn Is Supportive
But Mr. Clarke received backing from Sen. Jake Garn, R-Utah, who said blame for the banking industry's problems should not rest with the comptroller. Said Mr. Garn, "Should we make Bob Clarke responsible for the sins of his predecessors? This committee is just looking for a scapegoat."
Mr. Clarke also was backed by Sen. Alfonse D'Amato, R-N.Y., who has been critical of the regulator for cracking down on banks in New England.
"In fairness you will note that the examinations have increased since he became the comptroller," he said.
But Sen. D'Amato said he was still angry about the crackdown in New England and said bankers would not speak out because they fear retribution from examiners.
In response, Mr. Clarke said the agency was already working to form a mechanism through which bankers could air complaints to the comptroller's office without the fear of reprisal.
Sen. John F. Kerry, D-Mass., whose state has been hit hard by the credit crunch, wondered whether examiners were getting the message from Mr. Clarke to ease up so that loans can be more easily obtained.
Further Probe Sought
"We are doing everything we can to clarify the regulatory policies," Mr. Clarke said.
It is unclear how long the hearings will continue, but Sen. Timothy Wirth, D-Colo., said he wants to further investigate the 1988 failure of Dallas-based RepublicBank Corp. that has cost the deposit fund about $3 billion, to see if certain depositors were given warning to withdraw their funds.
"It just seems to me as long as we are in this, [we should] see if we can wipe the slate clean, once and for all," he said.