In the battle to help banks remain competitive-especially Michigan banks-Patrick M. McQueen is gaining ground.

His goal: to make Michigan among the most bank-friendly states in the country.

Mr. McQueen, a former banker who is the state's banking commissioner, is expanding state bank and thrift powers, removing branching restrictions, and slashing regulatory fees and applications.

"Laws used to protect banks from one another," Mr. McQueen said. "Now the barriers to entry are gone, and I want the banking code to be an attractive one."

His approach is unusual. Unlike many state banking regulators, he went on the offensive when national regulators such as the Office of the Comptroller of the Currency made federal charters more attractive than state charters. He challenged the OCC in court, saying it overstepped its bounds.

Mr. McQueen says he made a list of needed reforms when he became commissioner, in 1993, and has been following it ever since.

He helped get Michigan thrifts the same powers as federal savings banks. He has allowed banks and thrifts to sell insurance. He lowered exam fees. He eliminated branch applications for well-capitalized banks. He even marketed the Michigan charter with a videotape that touts the benefits of doing business in the state.

So far, so good. Just last week Evansville, Ind.-based CNB Bancshares announced that it is giving up charters it owns in Indiana, Illinois, Kentucky, and Tennessee to run its $6.9 billion bank through one Michigan charter. CNB gained the Michigan charter when it acquired St. Joseph-based Pinnacle Financial Services in April.

James J. Giancola, CNB's president and chief executive officer, said the company would have an easier time expanding its insurance sales with a Michigan charter. It also expects to save $1.9 million a year in taxes and regulatory fees.

Still remaining on Mr. McQueen's list is the adoption of a universal banking charter. Within the next year Mr. McQueen plans to unveil legislation that would grant "wide, broad powers" to banks, thrifts, and credit unions, and allow them to enter each other's business. For instance, banks would be allowed to sell real estate, a power that was granted to thrifts when the savings bank code was revised in 1996.

"I want them to compete head-on," he said.

Michigan bankers appreciate Mr. McQueen's initiatives. CFSB Bancorp in Lansing was so impressed with the improvements to the thrift charter that it swapped its subsidiary's national charter for a Michigan version in 1996.

It retained all of its powers and saved $80,000 in exam fees during the first year alone, said Robert H. Becker, chief executive of the $850 million-asset company.

Mr. McQueen's reform efforts have helped attract 24 new banks to Michigan since 1995, and six more applications are pending.

"He has made things easier for the banking sector," said Michael M. Moran, whose firm, Roney Capital Markets in Detroit, has helped some of the start-ups raise funds. "He's very open, very candid, and he has gone out of his way to be apolitical."

The large number of new banks has shocked even Mr. McQueen. "I didn't expect anywhere near this number," he said.

To be sure, Michigan lost some of its homegrown banks through mergers with out-of-state banks. But in one notable victory, Mr. McQueen convinced the newly formed Bank One Corp. in Chicago to leave subsidiary NBD Bank's charter in Detroit for at least a year after the merger this month between Banc One Corp. and First Chicago NBD Corp.

One reason bankers appreciate Mr. McQueen is that he is one of them. Mr. McQueen, 52, spent 23 years at Detroit's Manufacturers Bank, ending his career there as senior vice president and head of the commercial loan department when Manufacturers was acquired by Comerica Inc. of Detroit in December 1992.

"He understands your problems and your issues without a lot of explanation," said Robert J. Vitito, chief executive of Citizens Banking Corp. in Flint.

Gov. John Engler, a Republican, appointed Mr. McQueen to the commissioner's job in April 1993, even though Mr. McQueen had not been politically active and had met the governor only once before interviewing for the position.

Since then, Mr. McQueen has tried to steer clear of politics, a stance Gov. Engler supports.

Mr. McQueen said, "I set the agenda and keep him informed. He's totally hands-off."

Still, Mr. McQueen does not back down from a challenge. In 1996 his department sued the OCC over its decision to allow Cleveland-based KeyCorp to move its bank charter 80 miles, out of Michigan and into Indiana. Mr. McQueen said the OCC violated its own rule barring banks from moving their charters further than 30 miles.

He lost the first round in court but appealed. A three-judge panel in Cincinnati is reviewing the matter.

Mr. McQueen said he is "not at war with the OCC or the comptroller"-but he also said the agency was "clearly erroneous" in the KeyCorp decision.

"We're seeing more and more federal pre-emption, and I had to draw the line," he said.

Cecil R. Monroe, who retired as Oregon's banking commissioner last year, said the lawsuit against the OCC sends the right message.

"You have to take a stand and plant the flag," he said. "You need to be seen as someone who fights the fight."

Mr. McQueen's advocacy of state banking charters has made him a leader in the Conference of State Bank Supervisors, whose strategic planning committee he leads. Though his views do not always represent the consensus among other supervisors, "everyone looks to Pat to identify issues," said Ellen Lamb, the group's spokeswoman. "He doesn't pussyfoot around."

"Pat's very forward-thinking," said Catherine A. Ghiglieri, the Texas banking commissioner, who is also a champion of state charters. "He has the ability to see the big picture."

Mr. McQueen's get-it-done style has angered at least one banker. William Johnson, former chairman of Omnibank in River Rouge, criticized him in the local press for his decision to close Omni last April.

The state declared it insolvent after Omni failed to increase its capital to legally acceptable levels. Mr. Johnson told Crain's Detroit Business that he had a buyer for Omni, and that Mr. McQueen shut the bank down before a deal could be worked out.

But Mr. McQueen maintains that Michigan law gave him no choice. "The implication was they were ready to go, but it was far from being a done deal," he said.

Omni was later purchased by ShoreBank of Detroit.

Mr. McQueen said he enjoys his job as commissioner and would like to keep it as long as Gov. Engler is in office. (The governor is expected to win reelection in November over Democrat Geoffrey Fieger, the flamboyant attorney for Dr. Jack Kevorkian.)

And Mr. McQueen said he is not worried that a recession would cripple the state's banks. With many banks' fortunes tied indirectly to the ever- cyclical automobile industry, Michigan bankers "have a long history of dealing with these slowdowns," he said.

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