For Banks, a Day of Mixed Messages: Comptroller Scolds Them on ...
NEW YORK, Sept. 19ÛÓOn the same day that Federal Reserve Board Chairman Alan Greenspan applauded commercial banks for entering the securities business, the nation's other top bank regulator, Comptroller of the Currency Eugene A. Ludwig, criticized many of those same institutions for not doing a good job of telling their customers about the risks of securities.</br></br>Ludwig based his criticisms on a just-completed review of about 700 banks by his agency, the Office of the Comptroller of the Currency (OCC), which regulates national banks.</br></br>ÛÏWe believe our review clearly shows the need for heightened attention to disclosure practices,Û he said in a letter to Donald G. Ogilvie, executive vice president of the American Bankers Association (ABA), an industry trade group.</br></br>The OCC survey found that a disturbing percentage of banks failed to conspicuously disclose the risks involved in customers taking their money out of savings accounts, which are insured by the government, and putting it into the securities markets, which are not federally insured.</br></br>For example, the OCC found that 17 percent of bank sales brochures examined failed to say that the investments being sold were not insured by the government. Another 20 percent said so only on the back page of the document, and 29 percent of the materials did not mention that customers could lose money on the investment being sold to them.