To: James F. Hopkins who wrote (1038 ) 9/16/1999 8:37:00 PM From: Les H Read Replies (2) | Respond to of 1449
FOCUS-Examiners used against U.S. bank bill-report WASHINGTON, Sept 16 (Reuters) - Bank examiners from an arm of the U.S. Treasury were used earlier this year to find bank executives who would side with the White House against Republican-proposed financial legislation, a congressional report released on Thursday said. The report by staff of the Senate Banking Committee said officers from a large national bank contacted the Senate Banking Committee Jan. 29 concerned that examiners from the Office of the Comptroller of the Currency (OCC) had asked for names of bankers that could be cited publicly. Phil Gramm, the Texas Republican who chairs the committee, said the episode was an abuse of regulatory power. Gramm sponsored legislation that was passed by the Senate in May that would reduce OCC's authority in favor of the Federal Reserve. It would also exempt small, rural banks from the Community Reinvestment Act (CRA) which mandates banks lend in poor areas where they take deposits and make it harder for community groups to use CRA to challenge bank mergers. The White House has said President Clinton would veto a final bill containing these provisions. OCC spokesman Robert Garsson said the agency agreed the use of bank examiners was inappropriate. ``This was a request from Treasury that was inappropriately passed down the line,' Garsson said. Comptroller John Hawke put a stop to the project and issued advice to staff reminding them to keep the examination process free from any suggestion of political activity, Garsson said. The White House, which established a team to support CRA in late 1998, said OCC had misinterpreted an instruction coming out of a December strategy meeting. ``I think there was one ... particular communication with Treasury that it's my best guess was misinterpreted at OCC and inappropriate contacts were made,' said Clinton spokesman Joe Lockhart. Gramm, who is looking for his version of financial reform to prevail in House-Senate negotiations, said the report showed how vulnerable regulators could be when part of a politically driven entity like the Treasury. ``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,' Gramm said in a statement. The House bill reflected the Treasury position that banks be allowed to get into businesses like merchant banking and securities underwriting through direct operating subsidiaries, which fall under Treasury supervision. The Senate bill would have banks use holding companies, supervised by the Fed. Hawke, who was given a temporary recess appointment by President Clinton just weeks before the bank complaint about the examiners, is expected to be formally approved by Gramm's committee next week. >>>Another sign of corruption in the White House and the >>>Democrats in Congress.