Banking reserves boosted regulator rejected Senate panel kills Clarke nomination

November 07, 1991|By Stephen Labaton | Stephen Labaton,New York Times News Service

WASHINGTON -- The Senate Banking Committee killed President Bush's nomination of Robert L. Clarke to a second term as comptroller of the currency yesterday, first rejecting the nomination and then blocking further consideration of it by the full Senate.

Both 12-9 votes were along party lines.

The rejection came a day after the president and Treasury Secretary Nicholas F. Brady had lobbied the Democratic members of the committee in the hope that they would be able to turn two of them to join the Republican minority and approve Mr. Clarke's nomination to serve another five years as one of the nation's senior banking regulators.

After the vote, Mr. Brady accused Democrats on the committee of crass politics, character assassination and persecution.

"On a practical level, it makes no sense to take this action when credit availability is lacking, the eco- nomic recovery is sluggish and the American people ask for leadership," Mr. Brady said.

The comptroller supervises more than 4,000 nationally chartered banks, including many of the country's largest institutions, holding about two-thirds of the industry's assets.

With Mr. Bush expected to use Congress' rejection of his banking legislation as an issue in the next election, analysts said yesterday the Democrats were likely to seize upon the Clarke vote to blame the Republicans for the industry's problems.

Mr. Clarke's first term expired in December. The 49-year-old former lawyer and Republican fund raiser was nominated for a second one in January and has continued to serve in the post. Under the law, he can stay on the job until a successor is confirmed by the Senate.

Two of the largest failures in banking history -- at the Bank of New England and First Republic Bank of Texas -- came during Mr. Clarke's tenure.

Critics have contended that he did not act promptly to discourage banks in the 1980s from making excessively speculative commercial real estate loans.

Democrats maintained that Mr. Clarke's deregulatory approach depleted the insurance fund that protects bank deposits. Then, they said, he overcompensated by adopting standards that have contributed to what they have called a credit crunch.

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