What a difference a few years and freedom of choice can make! When Eugene A. Ludwig was appointed comptroller of the currency following the 1992 election, the financial and political fortunes of the banking industry were bleak.

Banks were still reeling from the massive loan losses they suffered during the 1980s and early 1990s. The political climate, poisoned by the collapse of the savings and loan industry, was miserable.

The prospects for the national bank charter looked particularly dark. Major national banks throughout the country had converted to state charters and others were considering it. Some were even weighing the possibility of abandoning their bank charters altogether.

Banks today are enjoying record profits and very strong capital levels. The national bank charter has once again become the charter du jour for larger banks, and the industry has achieved one political success after another.

Some victories, such as nationwide branching, have come in the legislative arena. Most have come from actions by the regulators, backed by unambiguous court rulings.

Many factors combined to make all this success possible. A prolonged period of economic expansion hasn't hurt. Banks are far better managed. The banks' trade groups have become more proactive and effective.

Ironically, the unattractiveness of the national bank charter was also important to the industry's turnaround. The comptroller's office was regarded by the industry as a harsh and inefficient regulator, out of touch with the marketplace.

Under Mr. Ludwig's leadership, the comptroller's office took aggressive steps to turn itself around. Efficiency was increased, rules and regulations were eliminated or simplified, and examination and filing fees were lowered. Examinations became less adversarial and more constructive.

The comptroller became a champion of much needed and long overdue financial modernization. Exposing himself to vituperation from congressional leaders and litigation from bank competitors, the comptroller decided to use his statutory powers to their fullest. If national banks were unable to compete in the marketplace, it would not be because the comptroller failed to do all within his power to unshackle them.

The comptroller's actions, particularly his moves on insurance sales and operating subsidiaries, have fundamentally changed the political landscape for banks. Banks no longer must have legislation that puts them in the driver's seat on anything that's proposed.

Banks have meaningful new alternatives for pursuing expansion ideas. For more than 40 years, expansion-minded banks had to operate through a holding company to engage in significant geographic or product line expansion.

This meant that a single regulator-the Federal Reserve-was the gatekeeper on bank expansion.

With the nationwide branch banking and operating subsidiary avenues now open, banks have several options.

It's critical that banks be vigilant about keeping all avenues for expansion open. While the national bank charter is the charter of choice for many banks today, banks should remember that only four years ago state charters were the best alternative.

The Clinton administration is reportedly readying a proposal to impose federal examination fees on state chartered banks.

This notion has been rejected on a number of prior occasions and the idea hasn't gotten any better.

State banks pay examination fees to their state banking departments, just as national banks pay fees to the comptroller of the currency. To also require the Federal Reserve and Federal Deposit Insurance Corp. to impose examination fees on state banks would make the state charter even less attractive than it already has become. An alternative for bank expansion would be made less desirable.

If the administration proposes this new tax on state-chartered banks, the banking industry should labor mightily to defeat the proposal once again. It's a very bad idea whose time should never come.

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