A political cloud hanging over the Office of the Comptroller of the Currency for nearly a year was lifted Thursday when Senate Banking Committee Chairman Phil Gramm ended his investigation of political activities by national bank examiners.

The Texas Republican issued a report saying the agency "aggressively" used 36 examiners to help the Clinton Administration collect the names of 18 bankers from 11 financial institutions who would defend the Community Reinvestment Act -- which is under attack by Sen. Gramm. In particular, the report knocks the agency for having eight examiners contact banks directly -- including three that were being examined at the same time.

Yet no major repercussions appear on the horizon. The report clears Comptroller John D. Hawke Jr. of any involvement, smoothing the way for committee action on his long-stalled nomination. Sen. Gramm has scheduled a Sept. 23 committee vote to approve Mr. Hawke -- whose temporary presidential appointment expires in December -- for a full five-year term.

The report compliments Mr. Hawke for immediately halting the name-gathering upon discovering it earlier this year, and praised the OCC and other regulatory agencies for adopting new conflict-of-interest policies to prevent banks from feeling pressured by their examiners into adopting particular political positions.

The Office of Thrift Supervision also was investigated, but the report said the thrift regulator -- unlike the OCC -- specifically directed examiners not to contact bankers about the list but forward the names of known CRA supporters. The Federal Deposit Insurance Corp. and the Federal Reserve Board were not involved in the search for these bankers, which was launched in November by a special White House task force.

Mr. Hawke said the report confirms the agency's account of events and should put the matter to rest. He said he immediately stopped any improper activities but took no disciplinary actions because the errors were inadvertent. Contacting bankers directly "was never intended to encourage bankers to make statements," he said. "It was intended to take account of their feelings" by making sure they did not object to being on record as CRA supporters. Mr. Hawke added that the list was never sent to administration officials.

In the short run, Sen. Gramm said he plans to use his findings as leverage against the Treasury Department -- which oversees the OCC and OTS -- in the battle over financial reform legislation. Besides being on opposite sides of the CRA question, Sen. Gramm and Treasury officials disagree on the kinds of activities that national banks may conduct through direct subsidiaries. Treasury wants them to enjoy broad powers, but Sen. Gramm wants big banks to exercise securities underwriting and other higher-risk powers solely through units of Fed-supervised holding companies.

"This is vivid evidence of the danger posed by the administration's proposal to take regulatory power from the independent Federal Reserve and give it to the Treasury Department," Sen. Gramm said in a statement. "The proposal is a political power-grab that must be defeated."

And the final recommendation is that the Senate Banking Committee study whether the OCC and the OTS should be separated from the Treasury.

"This report shows how vulnerable a regulatory agency is when it is part of a politically driven entity like the Treasury Department," Sen. Gramm said. "Regulators exert extensive power as it is. When politics is injected in the regulatory process, as happened in the Comptroller's office, the process becomes abusive."

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