Like a preacher at a country revival, Julie L. Williams is trying to save bankers from their sins.

Though the soft-spoken acting comptroller of the currency is not exactly spouting hellfire and damnation, the message is clear: Repent or face a day of reckoning much like the real estate crisis of the 1980s.

Over the last few weeks Ms. Williams has intensified the Office of the Comptroller of the Currency's crusade against eroding loan underwriting standards by ordering examiners to dig deeper into national bank portfolios and introducing new guidelines to help them root out high-risk loans.

"If they don't abate, these problems could become very significant," Ms. Williams said in a recent interview.

Banks must reject lending opportunities with margins that do not adequately compensate for the risk being taken, she said. "The spreads available today are very tight, so you have a combination of problems," she explained. "Banks are taking on more risk and not getting paid for it."

The latest moves follow three years of warnings from regulators including Ms. Williams and the previous comptroller, Eugene A. Ludwig. It is unclear, however, whether her recent homilies will be enough to make bankers change their ways. After all, Ms. Williams has carefully avoided any talk of the punitive measures in store for banks that do not shape up.

She contends specific threats could scare banks and spark a credit crunch. "We are shifting gears. But it is also important that we don't go from first to fifth gear. That could create greater problems than the ones we currently have," she said.

However, Ms. Williams acknowledged that she is disappointed with the industry's response to her repeated warnings. In meetings with examiners in recent months bankers have generally denied that their own standards have slipped, and have blamed the industry trend on irresponsible competitors.

But when examiners uncover risky loans, reckless bankers won't be able to blame crosstown rivals any longer, Ms. Williams said.

"It becomes much more difficult to ignore concerns when an individual bank has been presented with specific transactions by examiners," she said.

Ms. Williams ticked off a number of troubling trends plaguing the industry:

Maturities are being extended, increasing the chance that a borrower could fall on hard times and not be able to repay.

Credits have fewer covenants, and banks are often reluctant to enforce the requirements that do exist.

Many loans are designed to be repaid by uncertain future refinancings or equity offerings, not traditional debt service.

As if these trends weren't bad enough, more banks are eagerly jumping into high-risk consumer loans they once shunned, particularly high-loan-to- value and subprime lending. As competition in these markets heats up, Ms. Williams said, she is worried that some banks will emulate the egregious practices of some nonbank lenders such as failing to disclose loan terms or extending credit that cannot be supported by the borrower's income.

"This could be a safe business depending on how these loans are marketed and depending on how the business is run," she said. "But you must determine on what basis the customer has the ability to repay because you cannot depend on collateral for repayment."

For prudent banks, the comptroller's crackdown should not cause problems, Ms. Williams assured. Only when examiners find examples of poor underwriting practices in a sample of loans will they intensify their search of risky credits. "We are simply prioritizing what examiners do with their time," she said. "If they discover significant problems with credit risk, then the planned examination time may need to be extended."

After examiners bring risky loans to bank managers' attention, institutions will be expected to tighten their underwriting standards, increase loan-loss reserves, or possibly even make preparations for disposing of the credits if they do go bad.

"They'd better have workout people involved in some of these credits," said David D. Gibbons, deputy comptroller for credit risk.

If banks continue to let underwriting standards slide, the agency could order banks to take many of these steps and recalcitrant institutions could even face cease-and-desist orders, said several bankers.

But Sonny Lyles, senior vice president and chief credit policy officer at United Bank of Texas, predicted those steps will not be necessary.

"Bankers are responsible enough to understand what examiners are saying and do the proper thing," he said.

Mr. Lyles blamed many of today's problems on industry consolidation. "It's not surprising," he said. "At the very large banks, it's difficult for management to be aware of every lending practice, so it's right for regulators to bring these practices to management's attention."

Malcolm T. Murray Jr., chief credit officer at First Union Corp., said that after years of economic expansion many bankers may not remember that good times will not last forever.

"Bank management needs to be reminded that this is generally the point in the business cycle at which bad loans get made," he said.

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