Clarke Renamed Top Bank Regulator Over Sununu’s Objections

Comptroller of the Currency Robert L. Clarke was reappointed Tuesday by President Bush as the overseer of federally chartered banks, despite last-minute opposition from White House Chief of Staff John H. Sununu.

The economic slump in New England, where banks are cutting back drastically on their lending activity, prompted an effort by Sununu to oppose Clarke, according to government sources. New England bankers, including some from Sununu’s home state of New Hampshire, complained that Clarke’s regulatory staff members were virtually forcing bankers to refuse even good lending prospects.

Clarke’s opponents denounced him as “the regulator from hell,” an appellation the mild-mannered Texan liked to joke about.

The Administration expressed “complete confidence” in Clarke in a one-sentence statement from the White House announcing the reappointment.

Clarke’s new five-year term requires confirmation by the Senate. Approval seems assured, because Clarke is popular on Capitol Hill. When reports of Sununu’s opposition surfaced, members of Congress from both parties rushed to give Clarke public support. Still reeling from the costly collapse of hundreds of savings and loans, the legislators view Clarke as an important symbol of stability for the banking system.

Clarke’s office handles about a third of the nation’s banks, including giant institutions in the major commercial centers. These national banks have more than half of total bank industry assets.

Despite tough speeches to bankers, Clarke has long insisted that he isn’t trying to discourage lending but simply to advise against unduly risky loans.

He chastised the industry in October at the American Bankers Assn. annual meeting for “drawing down its credibility” in its handling of big losses on real estate loans. Many banks waited too long to recognize on their balance sheets the impact of the slump in real estate prices, the comptroller believes. Under prodding from regulators, banks are now putting in reserve big sums of money to offset the impact of the plunge in real estate values. “I’ve tried to reassure the bankers that we’re not telling them to quit making loans,” Clarke said in an interview earlier this year. “We’re just trying to get people to be a little bit more careful, to pay attention.”

But New England bankers complained that they felt intimidated by examiners from the comptroller’s office.