If there is anything the nation's chief banking regulator does not need, it is for the public to wonder if he is using his position of public trust to enrich himself unfairly.
Yet that suspicion is bound to persist as long as Controller of the Currency Robert L. Clarke insists on actively trading in stocks and junk bonds and borrowing money to invest.This week The Washington Post reported that, according to his own financial disclosure documents, Clarke has in the past four years made more than 100 stock and bond trades in a wide variety of issues, including those of a gambling casino. Since becoming controller in 1985, Clarke is said to have traded about $2 million in junk bonds alone.
Though Clarke insists his dealings have passed muster with ethics officials, what he is doing stands in marked contrast to the practices of other high-ranking financial regulators. To avoid potential conflicts of interest, they have placed their holdings in "blind trusts" to be managed by others as long as they hold a government post. Clarke should do so, too.
As a member of the boards of the Federal Deposit Insurance Corp. and the Resolution Trust Corp. as well as being controller of the currency, Clarke has potential access to a wealth of inside information not accessible to private investors.
As the Senate considers Clarke's renomination, it should keep in mind his track record as a capable regulator during a difficult period in banking. But it should also insist that he put his holdings in a blind trust even though present regulations do not require it. Then it should change those regulations. In the words of Chairman Henry B. Gonzalez of the House Banking Committee:
"The American public is already nervous about the nation's banking system. Its confidence is not enhanced by reports of a major federal regulator making investments in gambling casinos, junk bonds and other speculative enterprises - even if these investments are legal."