The new chairman of the Federal Deposit Insurance Corp. is a banker—indeed, a banker from a small Texas bank. But FDIC insiders have a queasy feeling that Don Powell hasn't developed a targeted set of priorities at this historic time for the federal deposit insurance agency. Considering that he's a banker, one would think Powell would have a fully formed set of views.

His confirmation by the Senate was approved just as we were going to press, and it is possible he'll be more forthcoming now that he is firmly in the chairman's seat. A big issue is where he stands—or doesn't stand—on reform of the deposit-insurance system. During his confirmation hearings he was meticulously obtuse on the issue.

He seems to have rejected his predecessor's conviction that any reform of the insurance agency should be done as a single package. Instead, Powell has indicated he thinks issues facing the agency can be prioritized, and that reform can be adopted in a piecemeal manner. That is short-sighted because changing one aspect of deposit insurance tends to impact most others.

A key—and controversial item—on which Powell dodged taking a stand is raising the current per-account insurance limit of $100,000, an issue vital to many community banks. As the stories in this issue regarding our rankings of community banks show, the biggest challenge today for many smaller banks is raising deposits, and increasing the insurance limit to $200,000 could be an important step in dealing with that.

Another issue is how to deal with banks owned by securities firms, which have attracted billions of dollars in deposits and which may force an increase in premiums. These relatively new banks have never paid premiums and there is the danger that all banks will begin paying insurance premiums because of these newcomers. Most of the banks have been established by investment banks.

Even Sen. Charles Schumer, the New York Democrat who has always been tied to the investment banking community, describes these units as "free-riders." Last month Schumer told New York bankers in a closed-door meeting that the free-riders "are offering as much as $600,000 in insured deposits by leveraging the number of banks in their financial services holding companies."

Schumer said these newcomers are "undermining the system" and "changing the safety net of Federal Deposit Insurance into a marketing tool."

These issues, although very important, are relatively easy compared with other issues facing the FDIC, such as how to price premiums if and when they are introduced, and how to measure risk.

These issues are integrally tied to one another and, we hope, the new chairman will step up to the plate with a far-reaching and courageous view.

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