WASHINGTON - Comptroller of the Currency John D. Hawke Jr. on Tuesday promised a crackdown on predatory lending by national banks.

However, the agency is limited in what it can do because most high-rate lending to customers with spotty credit records is legal, he added.

"Where we have credible evidence that a national bank is engaged in predatory practices, we will focus on the remedies that are within our power to invoke to address the problem," Mr. Hawke said at a conference organized by the National Community Reinvestment Coalition.

"To heighten our examiners' awareness of the fact that a predatory lending environment presents a high level of risk for discrimination," he said, "we will be issuing an advisory to examiners that instructs them to be on the alert for patterns of predatory lending."

Only the Federal Reserve Board has the authority to define certain lending practices as "unfair and deceptive," Mr. Hawke said. "While a formal rulemaking may be a more comprehensive way of dealing with widespread abuses, we may be able to make progress on an individual-case basis."

He gave First Union Corp.'s 1998 acquisition of Money Store Inc. as an example. To win approval of the deal, First Union had to guarantee that customers of both companies would be offered the same rates.

Strengthening regulatory oversight is only part of the solution, Mr. Hawke said.

"We must target not just the predators themselves, but the conditions that allow them to flourish," he said. "That means encouraging responsible competition in the same markets in which the predators operate."

To foster service in low-income areas, the OCC is exploring the idea of chartering "consortium banks" that would be owned by a group of banks sharing start-up, marketing, and operational costs.

Mr. Hawke, who first raised this idea on Dec. 3, said the agency is considering creating incentives for larger banks to invest in consortium banks. He would not provide details.

In his remarks Tuesday, Mr. Hawke said that banks must tailor products and take advantage of high-tech delivery if they are to succeed in poorer areas.

"We all know the old-style paper-based checking account, with all of the opportunities for overdrafts that it offers, is expensive for both banks and customers," he said. "Yet direct deposit coupled with debit card and point-of-sale access can be offered at a small fraction of the cost."

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