The uproar over the comptroller of the currency is unlikely to derail legislation updating financial laws, House Banking Committee Chairman Jim Leach said Tuesday.
"There is no credible reason a constructive result cannot be achieved in this Congress," he told the Council of Insurance Agents and Brokers.
Comptroller Eugene A. Ludwig is under close scrutiny in Congress and the media following revelations that he attended a May 13 coffee with President Clinton, 17 bankers, and top Democratic Party fund-raisers.
Alhough Rep. Leach called the meeting "small potatoes," he has long complained that Mr. Ludwig has improperly pressured the industry to oppose financial reform legislation - while expanding bank powers through regulation.
"It's very important to keep regulators outside the political process," Rep. Leach said.
He has introduced financial reform legislation that would allow banks, securities, and insurance firms to be owned by the same holding company.
"There is an enormous case for integration within the financial services industry," he said.
Rep. Leach said the media has sensationalized Mr. Ludwig's presence at the meeting, while largely ignoring a bigger problem: the potential for regulators to undercut lawmakers.
"It's unclear if this meeting has been exaggerated or understated," Rep. Leach said.
"I believe it unseemly for the comptroller to be involved in a fund- raising circumstance," he said. "But I also had a large debate over his lobbying individual banks on legislation."
In the last Congress, Mr. Ludwig lobbied against Rep. Leach's proposed legislation, arguing that it allowed new powers only for holding companies regulated by the Federal Reserve.
Additionally, the Comptroller's Office made Rep. Leach's bill moot by proposing to let banks add new powers directly through subsidiaries.
The Comptroller's Office should not have power to "decree issues that need to be resolved by Congress," he said.
Rep. Leach said he is optimistic that lawmakers can resolve disputes that blocked financial reform last year.
Still, Rep. Leach predicted a tough fight with some lawmakers and administration officials in pushing to eliminate barriers between banks and nonfinancial firms. "It's going to be a very close call," he said.
Efforts to allow nonfinancial firms to own banks are already causing cracks in the coalition of industry groups pushing for reform.
A letter sent Monday to Treasury Secretary Robert E. Rubin by a coalition of trade groups asked for the broadest possible affiliations.
However, the American Bankers Association, The Bankers Roundtable, and the Consumer Bankers Association refused to sign the letter. An American Banker story Tuesday incorrectly reported that the Roundtable and Consumer Bankers endorsed the letter.
