"How could you?" bankers want Jim Leach to explain.

The House Banking Committee Chairman was consorting with insurance agents and their chief political ally last week, backing a gambit to sneak limits on the Comptroller of the Currency into an appropriation bill.

Calculating that he could defuse the industry disputes blocking his financial modernization legislation, Rep. Leach backed House Rules Committee Chairman Gerald Solomon's July 17 gambit to limit the comptroller's ability to grant new powers to banks.

Rep. Leach will regret his decision if bankers decide he's more interested in his pet legislation than in improving the industry's competitiveness, said Mark Olson, a partner in the Washington office of Ernst & Young. "Bankers at this point need to question the extent to which Leach is interested in legislation that will provide a more rational legal environment for banking - or whether he's just interested in a bill," he said.

If banks suspect that Rep. Leach is willing to go along with limits on the comptroller, they may drop support for his "Leach Lite" proposal to combine regulatory relief with modest financial modernization, said Karen Shaw Petrou, president of ISD Shaw.

"That bill doesn't have anything banks really care about and they will oppose anything that could be a vehicle for limits on the comptroller," she said.

But Rep. Leach isn't troubled that he will be estranged from the industry, said a banking committee spokesman. Instead the Iowa Republican saw last week's vote a win-win situation because thinks either outcome would have improved chances for financial modernization.

If the restrictions had passed, Congress would have resolved the most contentious issue blocking his legislation. Instead, the overwhelming 312- 107 defeat settled the fight.

But despite the big victory, banks can't ignore the prospect that the comptroller restrictions will come up again, Ms. Petrou said.

"It's always important to view legislation as possible as long as Congress is in town and the comptroller moratorium has an aggressive and able lobbying team behind it."

However, if the American Bankers Association is miffed at Rep. Leach, it isn't saying so. ABA president James M. Culberson Jr. said Rep. Leach's desire to rein in the comptroller is well known and that no one was shocked by his support for the last-minute maneuver. "I think the lines are clear. It's just one issue out of many," Mr. Culberson said.

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