Responding to an attack by Rep. Jim Leach, Comptroller of the Currency Eugene A. Ludwig said Tuesday his policies are not responsible for the failure to enact Glass-Steagall reform.
A reform bill sponsored by Rep. Leach, chairman of the House Banking Committee, has been bogged down for months because of infighting between bankers and insurance agents.
The congressman lashed out at Mr. Ludwig on Monday, saying the comptroller caused the deadlock by illegally expanding banks' insurance powers. Rep. Leach's bill would rein in the national bank regulator.
But Mr. Ludwig denied wrongdoing and said, "I think (Mr. Leach) was not given a full picture, in terms of information."
"Selling insurance is not a risky business, but insurance has proved to be dicey politics," Mr. Ludwig said Tuesday after speaking to the Independent Bankers Association of America convention in Las Vegas.
Also jumping to the agency's defense, OCC Chief Counsel Julie Williams said in a separate speech Tuesday: "Rep. Leach is having a great deal of difficulty moving that bill. The problem is with the substance of that bill, not the comptroller of the currency."
Rep. Leach is most upset about the OCC's recent decision to allow Magna Bank in St. Louis to keep two insurance subsidiaries after converting to a national charter.
Mr. Ludwig and Ms. Williams said the Magna decision is authorized by section 35 of the National Bank Act, which allows banks converting to a federal charter to keep assets that are not permitted for national banks.
"The fundamental point is that Magna is engaging in the exact same activities, under the exact same regulations that they were before," Mr. Ludwig said. "Nothing has changed."
Ms. Williams also defended the comptroller's proposal to allow national banks new powers through operating subsidiaries. Ms. Williams said the proposed rule would allow banks to add only activities that are defined as "part of or incidental to banking."
Rep. Leach sees the operating-subsidiary proposal as a challenge to his legislation because he wants new powers granted only to bank holding companies, not to banks themselves, Ms. Williams said.
"Provided no safety and soundness issues are raised, bank management should make the decision of where new activities should be conducted," she said.
Rep. Leach, speaking Monday to a group of international bankers, argued that the comptroller is trying to elevate his agency over the other bank regulators. In the past, the Iowa Republican has accused Mr. Ludwig of trying to torpedo Glass-Steagall repeal because it would give the Federal Reserve power to regulate new bank powers, such as securities underwriting.
Citing what he called Mr. Ludwig's "defiance of congressional intent," Rep. Leach said, "We have a long-standing concern in the Republican Party that regulators have aggrandized powers to themselves that have no basis in law."