WASHINGTON - When Eugene A. Ludwig took over as comptroller of the currency in April 1993, bankers hardly knew what to expect.

During his first months in office, the industry saw him chiefly as a fervent advocate of fair-lending and as a rewriter of community reinvestment rules.

As Mr. Ludwig nears the halfway point of his five-year term, however, another profile has emerged. It looks a lot like that of the man whose portrait adorns his office wall: John J. Saxon, the Kennedy-era comptroller who tried to reshape banking as an aggressive, wide-ranging financial services industry.

Under Mr. Ludwig, the Office of the Comptroller of the Currency has emerged as an ardent advocate of new powers for national banks, a critic of overregulation, and a persistent battler for Washington turf.

The comptroller, a 49-year-old former banking and trademark attorney who attended Oxford University with President Clinton, has very consciously cast himself as an activist, high-profile champion of the banks he regulates. And he has studied closely the record of the last comptroller to take on that role.

"He in a lot of ways is the father of modern banking," Mr. Ludwig says of the late Mr. Saxon. "He really saw the future, and he acted on it."

But Mr. Saxon's bold attempts to remake the financial world ran up against powerful opponents in Congress, the Federal Reserve, and the insurance industry. Most of the big changes he proposed never came to fruition.

Mr. Ludwig, while he has tried to go about his work with more tact than his role model, has made powerful enemies of his own.

His most recent showdown has been with members of the House Banking Committee, who have been angered by his agency's fervent backing of bank insurance sales and its regulatory proposal to let banks engage in now- impermissible lines of business via operating subsidiaries.

"No agency of government has the right through promulgation of regulations to obviate law," Banking Committee Chairman James A. Leach, R- Iowa, wrote in a curt letter sent to Mr. Ludwig in April. And last month, Rep. Leach's committee approved an amendment to regulatory relief legislation that would bar the comptroller from expanding bank insurance powers.

"He's been too politically ambitious, too creative in stretching laws," says Kenneth Guenther, executive vice president of the Independent Bankers Association of America. "He has pretty well alienated the Republican power brokers in the House."

Mr. Ludwig's stands also have won him admirers. "I think he believes that a strong, competitive banking system is good for the country," says Gerald H. Lipkin, chairman and CEO of Valley National Bancorp in Wayne, N.J. "And he's worked toward making the banking system competitive."

"He's given prestige back to his office, which had lost it under his predecessor," says George G. Kaufman, professor of banking at Loyola University of Chicago and co-chairman of the Shadow Financial Regulatory Committee. "He's turned it into a much more dynamic agency than it's been in some time."

Mr. Ludwig, for his part, argues that his agency's newly activist stance is not at odds with the law.

As an example he cites the "30-mile rule," which lets national banks move their headquarters as far as 30 miles and keep the old main office as a branch.

"The 30-mile relocation statute couldn't be clearer; I mean, it's explicit," he says. "I believe in the past it wasn't used because people were so afraid it would create too much controversy."

In January 1994, the Comptroller's office began to let banks move across state lines using the 30-mile rule. State regulators and some community bankers cried foul, but in this case Congress did not object. Later that year, in fact, it approved the Riegle-Neal Interstate Banking and Branching Act of 1994.

Mr. Ludwig says he has the law on his side in his efforts to expand national bank powers as well.

To back that up, he points to another of his office decorations - reproductions of the 1863 law that created his agency and the 1864 follow- up that enumerated its powers. Then-President Abraham Lincoln and Treasury Secretary Salmon P. Chase "very much had in mind entities with broad powers that could support the economy broadly," Mr. Ludwig says. "They weren't trying to create a bunch of deposit-takers and lenders."

Mr. Ludwig says his belief that banks should be freed to compete with other financial services companies is a long-held one. But during his first year in office, it took a backseat to an entirely different priority - rewriting Community Reinvestment Act regulations.

At the request of President Clinton, he led a massive interagency effort to revamp the community reinvestment rules, which are supposed to ensure that banks and thrifts lend to all segments of the communities they serve.

Mr. Ludwig says his No. 1 goal in rewriting the previously paperwork- heavy CRA rules was to reduce the burden for bankers. But in his confirmation hearings before the Senate Banking Committee he had promised to "devote a great deal of time and energy to eliminating discrimination in our financial services system," and the impression some bankers got from the CRA rewrite process was that the comptroller was a "social engineer," as he puts it.

The jury's still out on whether bankers will be happy with the new CRA rules. But now that he has moved on from his focus on community reinvestment, more bankers have warmed to Mr. Ludwig.

"When he started out, the CRA side of the world seemed to be uppermost in his mind," says Tom Frost, chairman of Cullen/Frost Bankers Inc., a national bank holding company in San Antonio, Texas. "It seems to me he's turned completely from that to something I really admire, which is to make the national bank charter more flexible."

Mr. Ludwig has worked hard to court bankers. Since early last year he has roamed the country, meeting with groups of 100 to 200 bank executives at a time - to varying effect.

"I've seen him as charming as Johnny Carson; I've seen him as stilted as a petty bureaucrat," says James D. McLaughlin, the American Bankers Association's director of agency relations, who has attended several of the meetings.

Mr. Ludwig's technocratic side was apparent at an international banking conference his agency hosted recently in Washington: He opened the event by saying he had enjoyed "interfacing" with many of the people in attendance.

Nevertheless, some bankers praise his agency's newfound communication skills.

"We have had a real line of discussion open with examiners about what they're going to be looking for in an exam," says Mr. Frost. "That whole line of communication has been better."

The Comptroller's office under Mr. Ludwig also has taken a leading role among bank regulators in issuing guidelines and advisories on everything from derivatives to mutual funds to interest rate risks. He also has become a regular at meetings on the Basel Committee on Bank Supervision, the international bank regulators' group that previously had been chiefly the province of the Federal Reserve.

Of more immediate interest to many bankers is the complete rewriting of the Comptroller's office rule book initiated by Mr. Ludwig.

"I think he's made more progress than anybody before him in trying to make regulations make more sense and be easier to use," says former ABA president William H. Brandon, chairman and CEO of First National Bank of Phillips County in Helena, Ark. "I truly think he's made a difference in that."

Mr. Ludwig also has tried to cut costs for the 3,000 banks his agency regulates. He cut bank assessments last year - the first time in the history of the Comptroller's office that fees had gone down, he says - and promises another cut this year.

His office still charges more than most state regulators, however, and several large banks have recently switched to state charters to save money. Preventing more such defections, in fact, is a key motivation behind Mr. Ludwig's push to gussy up the national bank charter with new powers and other attractions.

"We are, you might say, sort of the Tiffany's or the Neiman Marcus of bank supervisors," he says. "We have to add value. There will always be those who don't want to shop at Neiman Marcus or Tiffany's, and that's fine. It's a free country. But I believe we have provided better service, and will."

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