When Eugene A. Ludwig steps down as comptroller of the currency in April, he will leave behind a legacy of expanded bank powers, unprecedented industry strength, and record profits.
But despite the high praise he gets from bankers today, Mr. Ludwig initially was viewed as another Clinton administration do-gooder determined to foist greater community lending and regulatory burdens on the industry.
That early determination to increase lending to low-income communities and protect consumers, industry experts now say, gave the Office of the Comptroller of the Currency credibility as a strong regulator capable of overseeing new industry powers. With that moral authority, the OCC embarked on a string of regulatory, court, and legislative victories that bolstered Mr. Ludwig's drive to modernize the national banking system.
"His early effort generated considerable unhappiness in the industry," said Karen Shaw Petrou, president of ISD/Shaw Inc. "But he realized that he had to make the OCC a credible defender of consumers and underprivileged communities if he was to move on his modernization agenda."
Mr. Ludwig, who last week announced plans to resign when his five-year term expires April 4, agreed. "We've tried to emphasize balance. The notion that you can have safety and soundness without evolution is completely wrong," he said. "In addition, banks can't be successful if they are not tied to their local community."
He pointed to his first major initiatives as comptroller-revising Community Reinvestment Act regulations-as a perfect example of how the agency has tried to strike a balance between fulfilling its supervisory duties and eliminating unnecessary burdens.
"That was a good crucible for starting out," he said.
Despite increased lending requirements, banks have found it simpler to comply with CRA since the rules were revised, said James D. McLaughlin, director of regulatory and trust affairs at the American Bankers Association.
"For the vast majority of banks it reduced record keeping, exams went quicker, and banks now know what is required of them," he said.
Also during Mr. Ludwig's first year in office, the OCC won the first in a string of Supreme Court victories when the justices unanimously agreed that Congress did not accidentally repeal a 1918 law allowing banks to sell insurance from towns with fewer than 5,000 people. Next came the Valic case in 1995, in which the high court …