REPORTER'S NOTEBOOK: State Bank Supervisors' Retiring Chief a No-Show

The Conference of State Bank Supervisors held its annual meeting last weekend, but the group's retiring leader was nowhere to be found.

Oddly, James Watt was barely mentioned, and everyone was tight-lipped about possible replacements for the man who has led the group since 1989.

Mr. Watt, who is retiring June 30, could not be reached for comment. But it is unusual for an association group chief to miss the annual confab - retiring or not.

That said, health problems and past experience may have persuaded Mr. Watt to skip the soiree. At a board meeting in Seattle late last year, he passed out, was hospitalized, and required surgery for ulcers, according to the group's vice president, Ellen Lamb.

Officials said the group would appoint an outside search firm to find the group's new chief, and estimated the search would take about three months. She said the group was still trying to determine what they were looking for in a successor.

"When Jim got here, the group was struggling financially, and we needed someone to get things back in shape," Ms. Lamb said. "But now things are better, and we're trying to figure out what direction we want to go in hiring our new CEO."

Robert A. Richard, director of regulatory services at the group and former Ohio superintendent of banks, will be the group's interim CEO. With CSBS since 1976, Mr. Richard would not comment on his chances of getting the job permanently or on other possible candidates.

Along with Mr. Richard, another person mentioned as a possible replacement for Mr. Watt is former Maryland Banking Commissioner Margie Muller. She was fired in January, reportedly over budget cutbacks in the state's banking department.

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Former Federal Reserve Board Governor John LaWare suggested the bank regulatory structure needs to be shaken up, but not at the expense of the state charter.

Mr. LaWare, now a vice chairman at the Secura Group consulting firm in Boston, proposed dividing supervisory power between two agencies with a third agency responsible for insuring deposits.

One agency would regulate all national banks, and another would oversee state-chartered banks. This system would streamline the regulatory process, without putting concentrating supervisory responsibility, he said.

"Giving one agency all the regulatory power would be a serious mistake," Mr. LaWare said. "It would be the end of a dual banking system, which has served the industry well over the years."

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During the annual meeting, bankers and regulators broke into small groups to discuss the hot issues of the day. The "unlevel regulatory playing field" was bankers' biggest gripe.

Credit unions, not taxed and are not subject to the Community Reinvestment Act, drew much of the bankers' ire. But bankers also groused that nonbank competitors - mutual funds and huge companies like AT&T that have entered the credit card market - don't share the heavy regulatory burden banks do.

"But any changes should take the form of less regulation for banks, rather than more regulation for nonbank providers," said CSBS' Mr. Richard.

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