Newspaper article THE JOURNAL RECORD

Fed's Relationships "Too Cozy?"

Newspaper article THE JOURNAL RECORD

Fed's Relationships "Too Cozy?"

Article excerpt

WASHINGTON -- A few months after attending a White House fund- raising event with the head of giant NationsBank Corp., a top regulator relayed a congratulatory message to him for the bank's plan to buy a 150-year-old Midwestern bank.

Comptroller of the Currency Eugene A. Ludwig didn't actually speak to NationsBank chief executive Hugh L. McColl Jr. on that occasion last August, according to an official in Ludwig's agency. But Ludwig's phone message to McColl regarding the third-biggest bank merger in U.S. history gives congressional critics another chance to question whether some federal regulators have had a too-cozy relationship with companies they supervise.

There's a twist in this case: NationsBank, which has stretched well beyond its Charlotte, N.C., roots in a quest to become a nationwide bank, donated $53,650 to national Democratic Party committees in September and October 1996. And another: Ludwig had represented NationsBank when he was a partner in the law firm of Covington & Burling. That link prompted him to withdraw from all matters touching on the bank when he joined the Clinton administration in 1993. Ludwig buttressed that separation last week, saying he would stay away from a specific decision on NationsBank's groundbreaking application to enter the real estate business. Ludwig would have delegated the NationsBank applications to Julie L. Williams, the agency's chief attorney, in any case because of his previous representation of the bank, a spokeswoman said. As for NationsBank's plan to merge with St. Louis-based Boatmen's Bancshares Inc., approved by the Federal Reserve Board in December, an official in Ludwig's agency said it would not be unusual for him to "touch base" with CEOs of big banks when an announcement of such importance was pending. Ed Alwood, a spokesman for Ludwig, declined comment. But an agency official, who spoke on condition of anonymity, said records show the two men didn't speak to each other on the subject. Second-tier applications for some banks under the new NationsBank umbrella to merge are pending before Ludwig's agency, an arm of the Treasury Department that regulates some 2,800 nationally chartered banks. …

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