WASHINGTON -- Employing a controversial new policy, the Comptroller of the Currency has blocked Federal Deposit Insurance Corp. regulators from conducting their own examination of fast-growing First Union Corp.

The FDIC's staff has also been told to scale back its request to conduct so-called backup regulatory examinations of 54 other national banks and thrifts.

The actions were taken at a closed-door meeting of the FDIC's board last week, according to agency and congressional sources.

FDIC staffers informed the board that they wanted to examine subsidiary banks of First Union, the nation's ninth-largest banking company, because of concerns about the organization's rapid growth through acquisitions.

But the sources said Comptroller Eugene A. Ludwig, who is viewed as the most powerful of the three current members of the FDIC's board, rejected the concerns.

Under a policy adopted by the board on Sept. 21, the agency's staff now must obtain board approval before examining an institution whose primary regulator is the Comptroller, the Office of Thrift Supervision, or the Federal Reserve. The policy is intended to eliminate duplicative exams.

The decision on North Carolina-based First Union could pose a conflict-of-interest problem for Mr. Ludwig, a congressional source said. One of the 15 banks First Union acquired recently is First American, a former client of Mr. Ludwig's before the lawyer became comptroller in April.

Mr. Ludwig declined to discuss the meeting.

"It would be completely inappropriate to comment on anything that happened behind closed doors," said his top deputy, Konrad Alt.

Mr. Alt confirmed that Mr. Ludwig once represented First American, but he said that Mr. Ludwig's removal from matters related to the bank ended when it was acquired in June.

The FDIC received authority to act as backup examiner from Congress, which was upset that so many thrifts and national banks were failing at a huge cost to the deposit insurance fund. Up until Sept. 21, the FDIC's supervision division decided which national banks and savings and loans required the insurer's scrutiny.

Mr. Ludwig, acting OTS director Jonathan Fiechter, and acting FDIC chairman Andrew Hove Jr. all voted for the new policy. Two other board seats are vacant.

List of Institutions

The board also instructed the FDIC staff to make a list of institutions they wanted to examine in the fourth quarter. That list was presented last week during the closed meeting.

In First Union's case, Mr. Ludwig reportedly told the FDIC staff that rapid growth is not cause enough to warrant a backup exam. He suggested that FDIC get whatever information it needs about First Union from OCC staff.

After the discussion about First Union and possibly other banks, the board decided to table action on the list. It is unclear why or at whose direction, but the FDIC staff is now working on whittling the list from 55 to a dozen or so.

That shorter list will be presented to the board for approval at the next closed meeting, which could take place next week. There is no closed FDIC board meeting this week.

FDIC staffers are upset over losing power, arguing privately that Mr. Ludwig is pushing through changes that strengthen the Comptroller's authority at a time when the FDIC board is not at full strength.

But others say Mr. Ludwig is appropriately reining in the FDIC, which is going into banks that are not in any danger of failing. The FDIC has too many examiners and not enough problem banks, they argue.

First Union spokesman Jeep Bryant said the bank was unaware of the regulatory tussle. He added that First Union does not think its acquisitions pose a threat to the bank's safety. At June 30, First Union's tier one capital ratio was 8.05%, down from 9.2% at March 31.

First Union has acquired $42 billion of its total $72 billion in assets just in the 1990s.

In January 1990, First Union bought Florida National Banks in Jacksonville with $7.8 billion. The $11.2 billion failed Southeast Bank in Miami was purchased in September 1991.

First Union took over the $8.9 billion Dominion Bankshares in Roanoke, Va., in March. In June, First Union finished two more acquisitions: the $4.5 billion-asset Georgia Federal Savings Bank in Atlanta and the $4.6 billion-asset First American in McLean, Va.

Analysts praised First Union Wednesday as a skillful acquirer.

"I think First Union has demonstrated over recent years a pretty conservative approach to its acquisitions," said Dick Stillinger, a senior vice prresident at Keefe Bruyette & Woods.

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