I heard through the grapevine that a fellow named Eugene A. Ludwig was likely to be appointed comptroller of the currency by the president. Few knew much about him, except that he was a successful Washington lawyer.

Bankers throughout the country were anxious. Banks were just beginning to recover from the worst economic turmoil since the Great Depression. Many believed the regulators had made things much worse through the harshness of their examinations.

The Comptroller's Office was demoralized. The agency had been subjected to intense criticism during the previous decade. Depending on the ax the critic was attempting to grind, the Comptroller's Office had either been too soft or too harsh on the banks. National banks throughout the country were switching to state charters, leaving the Comptroller's Office overstaffed.

Everyone wondered who Eugene A. Ludwig was and in what direction he would attempt to lead the Comptroller's Office. Not many predicted he would do what he has done-become one of the most progressive and effective comptrollers in history.

I, particularly, wouldn't have made that prediction after he'd been in office about a year. He devoted a great deal of energy and political capital that year to jawboning banks on the need to be more aggressive in complying with the Community Reinvestment Act and the fair-lending laws.

Though one could argue that banks needed a nudge, bankers felt put upon. They were just recovering from an awful decade-long period of bank and thrift failures. The last thing they wanted to hear was that they should be more aggressive lenders.

I listened to Gene Ludwig address a group of bankers during this period and wondered how successful he would be as comptroller. His gentle scolding of the bankers about CRA and fair-lending wasn't well received, to put it mildly.

Some five years later, Gene Ludwig's record of performance as comptroller of the currency is unsurpassed. Though he continued his push for better performance under CRA and the fair-lending laws, he also became a champion of a more open and competitive financial system.

In the face of harsh, uncivil criticism from politicians in both parties, Gene Ludwig pressed ahead with his program to modernize the national bank charter. His agency's actions have been upheld in numerous lower court decisions and in four unanimous decisions by the Supreme Court.

He has streamlined his agency's regulations, increased its efficiency, and reduced its fees. Defections from the national charter have ceased, and morale has bounced back.

Mr. Ludwig has devoted considerable energy to improving the supervisory process for national banks. His office pioneered a new approach-supervision by risk-to focus supervisory efforts on the most important areas affecting the banking system. The comptroller highlighted the need to increase supervision of derivatives and other off-balance-sheet exposures of banks.

Importantly, he has "leaned against the wind," as every effective regulator must. When Mr. Ludwig entered office at the end of a serious economic downturn, he urged banks to increase their loans. As he departs from office toward the end of a robust economic expansion, he's urging banks to be more prudent in their lending.

I've had the privilege to get to know Gene Ludwig during the past five years. I don't recall who is credited with the statement "Nice guys finish last," but whoever it was could not have met Gene Ludwig. No matter how loud and abusive political opponents became in their criticism of his stewardship of the Comptroller's Office, he never responded in kind.

Gene Ludwig will be sorely missed after his term as comptroller of the currency comes to an end on April 4, 1998.

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