WASHINGTON -- The Office of the Comptroller of the Currency finds itself caught in the middle of the dispute between two government agencies over Barnett Banks Inc.'s fair-lending record.

The Comptroller must decide whether to stay loyal to another bank regulator -- the Federal Reserve Board -- or to side with another branch of the administration -- the Justice Department.

If the Comptroller sides with the Justice Department, some of the national banks it supervises, especially those intent on expansion; may want to change charters to gain a "friendlier" regulator.

The dilemma arises from the Fed's recent approval of an acquisition by Barnett over Justice Department protests.

The Comptroller must weigh in before Barnett can complete the deal because it supervises four of the branches that would be acquired by the Jacksonville, Fla.-based banking company, a spokeswoman said.

Most banks cheered the Fed's action and will be watching the OCC closely, viewing its decision as a test of its beliefs on fair lending issues. Many view Comptroller Eugene A. Ludwig as President Clinton's point man on fair lending and the Community Reinvestment Act.

"Gene Ludwig is very much aware of the criticism" from the banks he regulates, said David W. Roderer of the law firm Winston & Strawn. "He has to weigh this. He is in a difficult position."

The OCC's decision will serve as "a massively important signal to the banking industry," added Kenneth Guenther, executive vice president of the Independent Bankers Association of America. "This is being very, very closely watched in the context of the Fed being willing to take on the Justice Department."

The test Mr. Ludwig faces is, "Does the OCC go with its fellow bank regulators, or does the OCC go with the social agenda of the Clinton administration?" Mr. Guenther said.

The Fed allowed Barnett to acquire some Florida branches of Glendale Federal Bank even though it knew the Justice Department plans to charge Barnett with fair-lending violations.

The Office of Thrift Supervision, which supervises Glendale, approved the deal Sept. 29, but does not have to hake the acquirer's situation into account, a spokesman said.

So far, the OCC seems to be biding its time, hoping the problem will go away. Although it normally would have ruled on the Barnett acquisition in August, the agency has decided to update the bank's stale CRA exams first, the OCC spokeswoman said.

If Barnett settles with the Justice Department before the OCC must rule, Mr. Ludwig's agency will avoid the wrenching dilemma.

But if Barnett fights the Justice Department, as it seems prepared to do, the OCC will be in the spotlight.

The Federal Reserve Board said it approved the deal because while Justice had told the banking agency of its conclusion, it refused to provide the Fed with the data it compiled during the inquiry.

One government official said the Justice Department was angered by the Fed's move: "Their view is, if it were a safety and soundness matter, you [the Fed] wouldn't go ahead. But obviously, in your mind, one law is not as important as another law." Not everyone shares that view.

"We anticipate that the OCC is going to engage in the same type of independent analysis that the Fed did," said one member of Barnett's defense team. "What they do on this will show if they are an independent agency or not."

The OCC is hypersensitive to the issue of losing charters. Over the past two years, 118 banks have renounced their national charier to become state banks, many of which are supervised by the Federal Reserve.

When banks Switch, the OCC loses revenues from examination fees and annual assessments. The Fed, which does not charge for its supervision, gains clout.

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