Despite having its competence questioned by a prominent lawmaker, the regulator for Bank of America cannot be faulted for the big loss on lending to the investment firm D.E. Shaw & Co., according to some leading banking lawyers.

They say there is little the Office of the Comptroller of the Currency could have done, or should have done, to avert the $372 million writedown.

"They're not there to protect shareholders from business decisions that (banks) make that don't work out," said Gilbert T. Schwartz, a partner at Schwartz & Ballen in Washington. "They're there to make sure the bank is in a position to absorb whatever losses are incurred."

Last month, soon after the writedown was announced, Rep. Edward J. Markey, D-Mass., asked the Securities and Exchange Commission to look into the OCC's role in the episode. He said he was concerned about "the competency of the OCC to oversee risky securities activities."

Though Bank of America lent the investment fund a huge amount in March 1997, industry lawyers said, the bank was big enough to cover it.

National banks cannot make a single loan that constitutes more than 15% of its regulatory capital. When the D.E. Shaw deal was struck, it equaled 5.2% of Bank of America's regulatory capital, which was $26.5 billion at the time.

If the OCC, which has resident examiners at each big bank, had thought the loan was exceptionally high-risk, it could have forced the bank to set aside enough reserves to cover it.

The agency does not comment on the actions it takes at specific banks.

Robert Garsson, director of press relations for the agency, said that, aside from judging the adequacy of loss provisions, the OCC has no role in telling banks which loans to make.

In March 1997 the D.E. Shaw deal was a darling of the industry.

"The best minds in the market at that time thought this was pretty hot stuff," said a lawyer with knowledge of D.E. Shaw. "It was not something anybody in the marketplace thought was particularly troublesome."

If the Comptroller's Office made any determination on the D.E. Shaw loan, it was most likely in a strictly legal sense. Here, too, the OCC was somewhat hamstrung. National banks are not allowed to invest in high-risk securities. But they can make loans whose proceeds are used by high-risk funds, which is what Bank of America did.

Repayment terms included an undisclosed interest rate and a fifty-fifty split in profits. The fund had no outside investors.

"There's ample precedent," Mr. Schwartz said, "that a bank can make a loan and make part of its return in profits."

After a dramatic downturn in the world's financial markets, the Shaw fund began losing money in August. In October, after its merger with NationsBank was complete, Bank of America announced a $372 million writedown reportedly tied to its venture with Shaw.

Bank of America still has a $1 billion exposure to the Shaw fund.

But even if a strict reading of bank regulations finds that the OCC did nothing improper, the agency remains on the hot seat.

Rep. Markey, a member of the Commerce Committee, asked in his letter whether the OCC should have forced Bank of America to disclose the loss before its merger with NationsBank in September.

That point, which was also made by Martin Mayer, a guest scholar at the Brookings Institution and author of "The Bankers," drew a defense from the agency.

Mr. Garsson said that such disclosure issues are the purview of the bank's holding company, BankAmerica Corp., which is not regulated by the OCC.

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