FROM THE OFFICE OF PUBLIC AFFAIRS

Mr. Chairman, Senator Sarbanes, and members of the Committee, it is a great honor for me to appear before you today as you consider my nomination to serve as the 28th Comptroller of the Currency. Having the opportunity to work with this Committee and its excellent staff over the past 3-1/2 years that I have served as Under Secretary of the Treasury for Domestic Finance has been a real privilege for me, and I look forward to continuing that relationship.

Being nominated to this important position would be an honor for anyone, but it has a special and very personal significance for me. Thirty-six years ago, when I joined my old law firm as a young associate, one of my first assignments was to work with the great Thurman Arnold in litigating a case against the Comptroller of the Currency, James Saxon. There were only 25 lawyers in the firm at the time, so even new lawyers got important assignments, and one of my early tasks was to take the deposition of Comptroller Saxon. I will never forget coming into his office in the main Treasury Department building it was the first deposition I had ever taken and being lectured about the fundamentals of bank regulation by Mr. Saxon -- who has long been one of my heroes while the firm's partners waited in terror to see what chaos I would create.

I eventually won the case, and that branded me as the banking lawyer in our then small firm. As a result, my professional career got channeled into a field of practice that has provided great challenges and enormous satisfaction. Over the years following that early case, I have spent much of my professional life working with and studying the Office of the Comptroller as a lawyer representing clients, as General Counsel of the Federal Reserve, as a Treasury official,and as a law teacher. I have developed great regard for the Office, for its history and accomplishments, and I have come to know through first hand experience what a tremendously talented and dedicated group of men and women the Comptroller's Office has been fortunate to attract.

While the banking industry is in excellent condition today earnings and capital are at all time highs there are significant challenges ahead. Turmoil in the world's financial markets, the incipient threat of deterioration in credit quality, the difficult challenges of the Year 2000 conversion, developments in technology and electronic delivery systems, the continuing need to assure fair access to credit and financial services for all Americans, the changing structure of our banking and financial services system, all require careful attention from bankers, bank supervisors and legislators.

Surely the first priority for any new Comptroller must be to ensure the continued safety and soundness of the banking system. With a cadre of bank examiners that is second to none in quality, and with the strong supervisory tools that Congress provided in the Federal Deposit Insurance Corporation Improvement Act of 1991, I am confident that the Office can continue to address this priority effectively. From my experience in the private sector, I know how important it is to the supervisory process to ensure that banks have strong and effective internal controls, and this will be a continuing focus for me.

In addition, I intend to continue the excellent work that the OCC started in the area of electronic banking and commerce. My experience at Treasury with the EFT '99 project has led me to become particularly interested in exploring ways national banks can provide affordable electronic accounts to those Americans who receive regular monthly checks, but who do not use bank accounts because the traditional paper-based checking account is ill-suited for them. And while electronic banking offers great advantages for many citizens, we must be concerned about how banking services can continue to be delivered to our inner cities, where too often the only financial services available are provided by high cost check cashing operations and finance companies.

Finally, I would like to assure that even as we see greater consolidation among large banks we pay attention to the needs of community banks, which will continue to be the backbone of our banking system. I am a very strong believer in the dual banking system, and I believe it is important for the health of that system that the national bank charter remain a viable and attractive choice for community banks.

I earnestly hope that my experience in this field over the past 36 years will enable me to make a contribution in dealing with these issues, and I look forward to a continued and productive association with this important Committee.

I would be pleased to respond to any questions you may have.