WASHINGTON - A key national bank regulator is trying to spur the creation of a secondary market for small business loans.

David P. Apgar, senior policy adviser at the Office of the Comptroller of the Currency, was scheduled to present his plan Thursday to the Jerome Levy Economics Institute, a think tank that is holding a conference at Bard College in upstate New York through Saturday.

"We are trying to kick-start the process," Mr. Apgar said in an interview this week. "The proposal is intended to provide a means of reducing business lending costs" without requiring lenders to standardize their business loans and without any government subsidies, he said.

Under the plan, the agency would allow banks to make public data collected by the OCC, which would help investors evaluate a bank's loan ratings.

Specifically, the agency's examiners would prepare an "agreement table," which would show how a bank's internal loan ratings compare with seven OCC credit quality categories.

Banks could pool a group of small business loans for sale on a secondary market, and investors would be able to use the agreement table to interpret the bank's assessment of the loans in the pool.

Now, loans to small businesses are not securitized because it is too expensive for investors to evaluate their credit quality.

Mr. Apgar stressed that the plan is his own and has not yet been formally proposed by the Comptroller's office. However, he said, the OCC may decide to put the plan out for comment as early as this quarter.

The OCC plan would give investors no information on how risky the loan pools for sale would be, so buyers would have to rely on the bank's credit assessment.

"This will become of increasing interest to small business lenders as liquidity tightens." Mr. Apgar said. "This is a proposal that is intended to be useful over the course of a whole business cycle."

Right now, with banks flush with cash, there would be little demand for business loan securitization - perhaps less than $100 million in securitized business loans annually, Mr. Apgar estimated. But when credit is tight, a $10 billion to $20 billion annual market could develop, assuming investors like the system he has proposed.

Demand will also remain low until the OCC adopts new rules designed to reduce the amount of capital banks must hold against small business loans.

Last year's community development banking law required all regulators to adopt such rules, and all the agencies are in the process of writing them. Mr. Apgar's proposal is separate from the new law, but would be helped by the changes it requires.

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