WASHINGTON - Bankers, beware - you may wake to find a Woofie in your back yard.

Woofies, shorthand for wholesale financial institutions, would be creations of the House Banking Committee's Glass-Steagall repeal bill. They're one of two key features to which Comptroller of the Currency Eugene A. Ludwig has acquired a fervent dislike.

During the past week Mr. Ludwig has been sounding the alarm about the proposed wholesale institutions, saying they pose a competitive risk to commercial banks. It's all part of his effort to squelch industry support for the bill.

Mr. Ludwig's Woofie warnings have added heat to his disagreements with Iowa Republican Jim Leach, chairman of the House Banking committee, over the Glass-Steagall package. The pair are also at odds over a provision that would bar the comptroller from approving new insurance powers for national banks.

Woofies would be banking subsidiaries established by investment bank holding companies. In most respects they would be like any state-chartered, Federal Reserve-member bank. However, they could not receive federal deposit insurance or take deposits of less than $100,000.

They would have access to the central bank's discount window and could participate in the payment system. They would be banks in every other way, too - offering commercial loans, credit cards, and checks.

However, the wholesale institutions would be required to hold more capital than insured banks.

Investment bank holding companies would face less strict firewallregulations between their banking and securities subsidiaries than those between the subsidiaries of bank holding companies.

Bank holding companies, whose subsidiaries accept insured deposits, would be prohibited from owning the wholesale institutions. Mr. Ludwig called that restriction unacceptable.

"For most of the large banks I have encountered, the net effect would be to give them new competition by creating a new class of competitors, while simultaneously hampering their ability to compete," he said.

Community banks, which generally don't have the resources to establish subsidiaries, would have an even tougher time competing with the wholesale institutions and their owners, Mr. Ludwig said.

Mr. Ludwig has argued that bank holding companies, prohibited from establishing their own wholesale financial institutions, would be at a competitive disadvantage.

Rep. Leach has defended the wholesale bank proposal, arguing that the framework allows banking institutions the choice between tightly regulated, federally insured operations and uninsured, less-restricted businesses.

He has also argued that giving Woofies access to the Federal Reserve's discount and payment services might entice more financial services companies to bring their current banking activities under the Fed's jurisdiction.

Rep. Leach argued in a speech Monday to the Institute of International Finance here that Mr. Ludwig's opposition resulted from "institutional power tripping," rather than from worries about banks' competitive position. Rep. Leach said that the Comptroller's office has argued for the power to charter wholesale banks, and that the agency is reluctant to see that duty left to the Federal Reserve.

"Turf concerns, while meaningful to the bureaucratic participants, simply should not dictate government policy," Rep. Leach said.

But opposition to wholesale banks is nothing new. Former Federal Reserve Chairman Paul A. Volcker argued against them last April when he testified before the House Banking Committee about the Glass-Steagall bill. "Why should this particular class of institution be free of federal deposit insurance when it will be competing side by side with banks that have to pay deposit insurance premiums?" Mr. Volcker said.

Despite Mr. Volcker's protest, wholesale financial institutions have received little attention, and several bankers said they were not sufficiently informed about the proposal to comment about the competition they would create.

But Patrick Forte, president of the Association of Financial Services Holding Companies, agreed with Mr. Ludwig that banks should be allowed to establish wholesale institutions too.

"Bank holding companies are as competent to operate these companies as anybody else," he said.

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