WASHINGTON - House Banking Committee Chairman Jim Leach blasted a regulatory proposal designed to let national bank subsidiaries underwrite securities directly.

"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 Iowa Republican told Comptroller of the Currency Eugene A. Ludwig in a letter last week.

Rep. Leach has introduced legislation to repeal the Glass-Steagall Act that would allow banks to affiliate with securities firms, but only through a holding company.

The Comptroller's office proposed regulations last November that would allow bank subsidiaries to offer products and services prohibited for the parent. The agency refused to comment on Rep. Leach's April 5 letter; a spokeswoman said the comptroller is still working on his response.

But Rep. Leach is not the first lawmaker to criticize the comptroller's proposal.

John D. Dingell, D-Mich., then chairman of the House Commerce Committee, argued in December that the plan "raises significant questions of fact and law with troubling practical and public policy implications."

The Comptroller's office shot back in January as Mr. Ludwig defended the agency's authority to permit banks to offer new products and services through subsidiaries.

"There is no reason a national bank should be denied such corporate flexibility," Mr. Ludwig said. New activities, the comptroller noted, would be approved only if safe and sound.

Congressional opposition could derail the agency's plans.

Rep. Leach's opposition is "a very serious challenge to the comptroller," said Karen Shaw, president of ISD/Shaw Inc. "It has to be a major concern when the chairman of the relevant committee comes out against the proposal."

While the Clinton administration's Glass-Steagall bill would allow banks to engage in securities activities directly through a subsidiary, Rep. Leach has said this structure does not insulate an insured depository against the financial problems with a subsidiary.

But Edward L. Yingling, chief lobbyist for the American Bankers Association, said the proposal by the Comptroller's office does not pose any threat to insured deposits.

"We are certain that the Comptroller would impose any regulations necessary to ensure safety and soundness in each case," Mr. Yingling said.

Rep. Leach said a subsidiary can quickly bring down its parent, pointing to the recent collapse of the British investment bank Barings PLC, which was brought down by one trader who used derivatives recklessly. Mr. Yingling said that Rep. Leach's example "really doesn't apply, because commercial banks can already do what Barings did."

The Leach letter also likened the proposal by the Comptroller's office to the direct investment powers granted to savings and loans in certain states in the 1980s.

"It's a valid parallel, but that's not to say that the problem can't be dealt with," said industry consultant Bert Ely.

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