May 4, 1998

The Honorable Julie Williams
Acting Comptroller of the Currency
250 E Street, S.W.
Washington, D.C. 20530

Dear Ms. Williams:

I am writing about today's Securities and Exchange Commission (SEC) order instituting cease-and-desist proceedings against NationsBank and NationsSecurities, a broker-dealer registered as a joint venture between operating subsidiaries of Dean Witter and NationsBank, in connection with significant fraudulent securities sales practices.

These entities conspired to develop and market highly leveraged interest-rate-sensitive derivatives (inverse floaters) as safe, Government-backed Term Trusts. They targeted low- income elderly retirees with maturing certificates of deposit. In one misleading sales pitch, the registered representative waved a picture of the U.S. Capitol and repeated the alleged promise of a senior bank official that as long as the Capitol was standing, their money was safe and they would get it back. Nations sold hundreds of millions of dollars worth of the Trusts netting it more than $16 million in fees and commissions. When the Federal Reserve raised interest rates in the Spring of 1994, however, the bottom fell out of the Trusts, wiping out a considerable amount of the savings of the elderly investors.

The record reveals that the OCC examined NationsBank in 1994 and 1995 and that those examinations uncovered many of the fraudulent practices detailed in the SEC's order. I am unable to discover any action on your agency's part to investigate the "red flags" further or to alert the SEC or to stem the practices in order to protect these investors.

In order to assist us in understanding the OCC's role, please provide the following documents and responses by the close of business on Friday, May 15, 1998:

1. Copies of the 1993, 1994, and 1995 examinations of NationsBank, and any related entities, relevant to the offer and sale of Term Trusts.

2. Copies of any communications between the OCC and NationsBank and NationsSecurities regarding the offer and sale of Term Trusts in general and with specific reference to any examinations findings concerning the matters covered by the SEC order.

3. Your agency's plan for examining other national banks and their operating/securities subsidiaries for similar sales practice problems. If none, please explain why.

Sincerely,

JOHN D. DINGELL
RANKING MEMBER

cc: The Honorable Tom Bliley, Chairman
Committee on Commerce

Members, Committee on Commerce

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