Efforts to modernize banking laws and regulations have not been nearly bold enough, said Comptroller of the Currency Eugene A. Ludwig.

In a speech on Friday to the Comstock Club, a Sacramento, Calif., public affairs group, Mr. Ludwig called for "a new paradigm for the financial services industry." He didn't say just what that paradigm would look like, but hinted that it should involve breaking down all barriers between the insurance, securities, and banking businesses.

"At the cutting edge of the marketplace - where the business of tomorrow must be done - the lines between different types of financial products and different types of financial service providers are getting less clear all the time," he said.

"Without thoughtful, thoroughgoing reform, efforts to impose the old framework on new marketplace developments will yield increasingly strange results."

Mr. Ludwig, who has butted heads with congressional leaders over his agency's push to give national banks more insurance powers, said that "none of the legislative proposals that have been actively considered under the label of 'financial modernization' - in this Congress or any recent Congress, by policymakers of any political persuasion - meaningfully address this problem."

The comptroller acknowledged that it won't be easy to come up with a regulatory structure that matches the new financial realities. "We want to reduce government interference in the free market," he said of the public. "But we don't want our financial institutions to fail, and we want somebody to complain to if we think we're being ripped off."

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