House Banking Committee Chairman Jim Leach on Monday accused Comptroller of the Currency Eugene A. Ludwig of "unseemly" and "self-aggrandizing" efforts to grant national banks new powers by ignoring laws.
In remarks before the Institute of International Bankers, Rep. Leach blasted the comptroller for a ruling allowing a Missouri bank to retain its network of insurance agencies after converting to a national bank. The Iowa Republican also criticized an OCC plan to let national banks engage directly in activities that currently are only permissible for their parent companies.
"An unelected regulator simply cannot be permitted to abrogate the constitutional authority of Congress and take the power to legislate onto himself," Rep. Leach said.
The Missouri bank ruling, on behalf of Magna Bank, allows national banks to engage in a range of nonfinancial commercial activities, even though "current law is clear that national banks are not permitted to have such subsidiaries," he said.
Also, by allowing banks new powers through operating subsidiaries, the comptroller would "negate the need for a bank holding company," Rep. Leach said. "There is not a shred of statutory support for the notion that a national bank is authorized to conduct activities in a subsidiary that are not permissible for the bank itself."
The comptroller's recent actions put the deposit insurance system at risk as well, Rep. Leach said.
By opening the door to new powers for national banks, the comptroller is attempting to boost his agency's importance, Rep. Leach said. "Not only do the administrative actions he is advocating undermine states' rights and the ability of Congress to set policy, but they are blatantly designed to empower the comptroller over other regulators, state and national," he said.
By overstepping his regulatory authority, Rep. Leach said, the comptroller has placed a roadblock before congressional efforts to modernize the financial services industry.
Rep. Leach blamed the comptroller's aggressive tactics for the dispute between the insurance and banking industries, which has stalled his Glass- Steagall/regulatory relief bill.
"The comptroller has clearly strengthened the case for the insurance industry," he said.
A spokesman for Mr. Ludwig said the agency could not react to Rep. Leach's speech because no one there had seen a copy of it.