WASHINGTON -- Senior bank, thrift. and credit union regulators told a House panel Tuesday that the nation's financial institutions suffer from burdensome and duplicative regulation.

"There's just a great deal of silliness and duplication" in bank regulations, said Comptroller of the Currency Eugene Ludwig. "We have seven different definitions of capital. We may need more than one, but we don't need that many." "We have created a whole new industry of lawyers and consultants" to help banks comply with government regulation, added Federal Reserve Board Governor John P. LaWare.

Support Seen for Relief

The regulators were generally warmly received by members of the House Banking subcommittee on financial institutions, adding to the growing belief among bank lobbyists that Congress may pass a regulatory relief bill.

"I have no doubt that if we could get a clean shot at a major regulatory relief amendment, we'd get 250 votes on the House floor," said Edward L. Yingling, executive director of government relations for the American Bankers Association.

If the entire House is present, 218 votes would be a bare majority. But Mr. Yingling conceded that amendments on bank bills rarely come up in a form that gives lawmakers a clear choice. "The problem is, things usually get attached to them," Mr. Yingling said.

A Sharp Dissent

However, one influential banking committee Democrat dissented.

"I still have a bitter taste in my mouth over the banking industry's campaign to convince the public that regulation is evil," said Rep. Charles E. Schumer, D-N.Y.

Mr. Schumer, chairman of the banking committee's Democratic caucus, said "the low point" came during the economic summit in Little Rock, Ark., in December, when bankers convinced President Clinton that a reduction in regulation would fuel new lending.

"Regulatory burden has not caused the credit crunch," Mr. Schumer said. "It has exacerbated it around the margins."

Mr. Schumer said banks have diverted money from commercial loans to government securities because of the spreads in the bond market.

He said he isn't against eliminating duplicative or unnecessary regulation, but he believes most of the provisions in the major regulatory relief proposals do not fall into those categories.

Mr. Schumer said he would fight the proposals "like death."

Bill Pending

The major bill now pending before the House Banking Committee is the Economic Growth and Financial Institutions Regulatory Paperwork Reduction Act of 1993, sponsored by Rep. Doug Bereuter, R-Neb., and Rep. Jim Bacchus, D-Fla.

They have enlisted a majority of the House -- 104 Democrats and 147 Republicans -- as cosponsors.

The bill would direct regulators to reduce the paperwork related to the Community Reinvestment Act and would give banks with the best CRA rating a "safe habor" from community challenges.

The bill would also permit the agencies to examine well-capitalized banks every two years, rather than the 18-month interval under current law, and would permit federal regulators to rely on exams by state agencies to avoid duplication.

Adding Requirements

While the financial institutions subcommittee considered the regulatory relief measures, another House panel was reviewing legislation that could add to regulatory requirements.

The Check Cashing Act of 1993, which is intended to regulate check-cashing agencies, would require banks to cash state and federal government checks free of charge, even for noncustomers.

"These are government checks, backed by the full faith and credit of the federal government and not subject to fraud," said Rep. Albert Wynn, D-Md., one of the bill's sponsors. He said it is "almost impossible to cash a government check at a bank where you are not a depositor." Under the bill, banks could be fined up to $500,000 for not providing the service.

The bill also would limit the fees of check-cashing services to the greater of 0.85% of a check's value or 50 cents. Some check cashers charge as much as 6%, Mr. Wynn said.

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