WASHINGTON - Is Alan Greenspan trying to make a power grab with a parasol?

The Federal Reserve chairman was given the role of "umbrella" regulator of financial services firms that own banks under the Gramm-Leach-Bliley Act of 1999. Though banking, insurance, and securities regulators are the primary regulators, Mr. Greenspan contends the law gives the Fed final say in overseeing the conglomerates the new law permits.

But that's not how Comptroller of the Currency John D. Hawke Jr. interprets the law.

A banking lawyer extraordinaire - ironically, he's a former Fed general counsel - Mr. Hawke says Gramm-Leach-Bliley actually envisions a limited, back-up role for the central bank. While he's too smart to put it this bluntly, Mr. Hawke is clearly concerned that the Fed will use its umbrella authority to gain access to the country's largest banks - most of which hold national charters and so are under the comptroller's oversight.

As diplomatically as possible, Mr. Hawke is trying to convince people that the Fed's umbrella power is actually a flimsy parasol that should not be used to horn in on national bank exams.

Asked in an interview Thursday whether the Fed gained any power under Gramm-Leach-Bliley, Mr. Hawke said, "Oh no. It lost."

Later in a speech, Mr. Hawke added, "To be sure, Gramm-Leach-Bliley might have been an opportunity for Congress to rationalize the structure of regulation by unifying it under a single agency. … But it chose not to do so."

The comptroller is, however, late to the debate.

President Clinton signed Gramm-Leach-Bliley on Friday, Nov. 12. By the following Monday, Mr. Greenspan was already pledging to be "an active umbrella supervisor." The Fed, he said would play a "central role … in prudential oversight for bank subsidiaries of holding companies." If a large national bank were taking too many risks, Mr. Greenspan said, the Fed could examine it and even order divestitures.

Fed governors have followed up with speeches of their own, particularly Fed Governor Laurence Meyer. From December through May, Mr. Meyer said the Fed cannot rely on primary regulators, such as the Comptroller's Office, for information about large banks. The Fed must see for itself. "The Federal Reserve believes that it needs to know more about the activities within large insured depository institutions than can be derived from access to public information or from the reports of the primary bank supervisors," Mr. Meyer said May 31.

Every time a Fed official talks publicly about the central bank's new duties under Gramm-Leach-Bliley, the folks at the Comptroller's Office cringe, including Mr. Hawke. He's hinted at this in the past, but on Thursday Mr. Hawke made it clear that he's had enough.

"There has been a surprising degree of confusion about the roles assigned by Congress to the various financial regulators," Mr. Hawke said at a Women in Housing and Finance lunch.

"Some say that the legislation exacerbated an already balkanized system … that it parceled out responsibilities among the agencies based on considerations of industry politics and regulatory turf.

"Others view it as having created a new hierarchical structure, under which a single 'umbrella' regulator, with unique responsibilities for guarding against systemic risks, is to assume a position of preeminence among the financial regulators.

"In my view Congress did not intend to create a new structure of regulation in Gramm-Leach-Bliley," Mr. Hawke continued. "On the contrary, it strongly reaffirmed the existing roles of each of the financial regulatory agencies, and emphasized the importance of the special and complementary roles they play."

Mr. Hawke said the new law "perpetuates the role of the Federal Reserve as the regulator of holding companies, with its traditional function of helping to protect banks from risks that might arise elsewhere in the corporate family, outside the bank."

The Comptroller's Office, he noted, is "the primary line of defense for the safety and soundness" of national banks.

This debate is hardly new. The Fed and the Comptroller's Office went 12 rounds last year as Congress considered Gramm-Leach-Bliley. The Fed won many points, most notably by preventing national banks from doing merchant banking at least through 2004. But in handing the Fed its umbrella, Congress specifically required the central bank to rely on the primary regulators "to the fullest extent possible."

"The new law puts a very high premium on deference," Mr. Hawke said in the interview Thursday.

"We have to avoid harassing banks."

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