A Guide to the Key Committees and Regulators
You can't tell the players without a program. As banks have grown more complex, with a larger repertoire of product and service offerings, the number of agencies and congressional committees that affect their daily lives has grown as well.
Some are obvious: the House and Senate banking committees, for example. The relevance of other bodies, such as the Federal Housing Finance Board, is less readily apparent.
Here, then, is the American Banker's Guide to Washington: a list of the key regulatory agencies and congressional panels - along with key officials, their aides, and phone numbers - whose decisions affect the business of banking in America. Robert M. Garsson, assistant chief of American Banker's Washington bureau, compiled the list.
FEDERAL DEPOSIT INSURANCE CORP.
550 17th St., N.W. Washington, D.C. 20429 202-393-8400
Chairman: L. William Seidman
Once an insurer solely for the banking industry, the agency now backs accounts for up to $100,000 at both commercial banks and thrifts through the Bank Insurance Fund and the Savings Association Insurance Fund. In addition, the FDIC is the federal regulator for state-chartered banks that are not members of the Federal Reserve System.
Under Mr. Seidman, the FDIC's reputation grew to such lofty heights that Congress unblinkingly handed over the additioinal job of supervising the savings and loan bailout, a Herculean task that lawmakers were afraid to entrust to anyone else. The S&L bailout had no sooner been signed into law, however, than attention began shifting to the Bank Insurance Fund, which was rapidly sliding into insolvency. At the same time, the S&L bailout quickly turned into the FDIC's Vietnam. a morass from which Mr. Seidman worked hard to distance himself during his final days in office. William Taylor, director of supervision for the Federal Reserve Board, has been nominated to succeed Mr. Seidman.
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
1776 G St., N.W. Suite 850-B Washington, D.C. 20006 202-357-0177
Chairman: John P. LaWare Executive Secretary: Robert J. Lawrence (until Nov. 1) Executive Secretary-Designate: Joseph M. Cleaver
The council was established in 1979 as a formal body to set uniform examination standards, principles, and report forms. The council runs schools for examiners employed by bank, thrift, and credit union agencies. Its members are the heads of the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the National Credit Union Administration, and the Office of Thrift Supervision, as well as a governor of the Federal Reserve Board.
The exam council is one of Washington's least-known agencies. Its chairmanship rotates among the heads of the agencies it represents. The council's staff is expanding, largely because of a new subcommittee working on real estate appraisal rules, and it expects to move into larger offices early next year. Other changes are in the wind as well. Mr. Lawrence will retire on Nov. 1 and be replaced by Mr. Cleaver, assistant director of the Federal Reserve's division of bank supervision and regulation.
FEDERAL HOUSING FINANCE BOARD
1777 F St., N.W. Washington, D.C. 20552 202-408-2500
Executive Director: J. Stephen Britt
Spun off from the Federal Home Loan Bank Board, which Congress abolished in 1989, the housing finance board oversees the 12 district Home Loan banks that provide low-cost funding for the thrift industry, and the handful of commercial banks that have joined since the thrift law opened the doors.
The agency is too new to have a reputation. Although created in the 1989 law along with the Resolution Trust Corp. and the Office of Thrift Supervision, it laboured in anonymity for most of its young life, and only this year began staffing up in earnest. Its board of directors hasn't even been confirmed by the Senate; instead, they were placed in office by President Bush, who can make "recess appointments" while Congress is not in session.
The finance board's future is murky. The survival of its regulatory charges - the 12 Federal Home Loan banks - depends largely on their ability to attract commercial banks as members and encourage them to borrow.
FEDERAL RESERVE BOARD
20th St. and Constitution Ave., N.W. Washington, D.C. 20551 202-452-3000
Chairman: Alan Greenspan
As central bank, the Fed is entrusted with the conduct of monetary policy, a responsibility that monetary economists say makes it the nation's most important economic policymaker. The Fed also oversees the 1,014 state-chartered banks that are members of the Federal Reserve System, as well as 6,425 bank holding companies and 97 Edge Act corporations. The bank holding companies it regulates own 8,700 commercial banks and 94% of the assets of the industry.
Fed Chairman Alan Greenspan stood in the shadow of his legendary predecessor, Paul A. Volcker, for all of two months after his appointment. The stock market crash in October 1987 was an early and tough test of Mr. Greenspan's mettle. But by all accounts, the new chairman passed with flying colors simply by doing what Fed chairmen have always done - pumping cash into the financial system until confidence is restored.
The Fed is easily the most feared and respected of the federal banking agencies, and it is treated with deference on Capitol Hill, even by lawmakers who think the central bank's tight money policies are starving their constituents. In 1987 the agency opened an important crack in the once impervious Glass-Steagall wall, holding that the law did not bar all bank underwriting activities, but only limited them in volume. With that one decision, the Fed created a new legislative climate in which it is widely assumed that Glass-Steagall repeal is inevitable.
However, the Fed's failure to detect the foreign ownership by Bank of Credit and Commerce International of First American Bankshares Inc. could haunt the central bank for some time. House Banking Committee Chairman Henry B. Gonzalez, D-Tex., who has long wanted to impose checks on the Fed's power, is expected to play the BCCI card for all it is worth.
OFFICE OF THE COMPTROLLER OF THE CURRENCY
250 E St., S.W. Washington, D.C. 20219 202-874-5000
Comptroller: Robert L. Clarke
Founded during the administration of Abraham Lincoln, the OCC is the oldest of the bank regulatory agencies. A branch of the Treasury, the agency unfailingly follows the party line on policy issues. On regulatory matters, however, it behaves like an independent agency as the watchdog for the nation's 3,900 national banks.
Mr. Clarke is regarded as so mid-mannered that when he proclaimed himself "the regulator from hell" shortly after the credit crunch began, Washington insiders took to calling him "the regulator from heck."
In his six years at the helm of the agency, though, Mr. Clarke has proved himself the boldest of bank deregulators: the great Satan of the securities and insurance industries. He found authority in existing law for banks to underwrite and sell securities backed by assets that they originated, such as auto loans, and he found authority for banks to sell insurance nationwide from towns of under 5,000. But worried about the banking industry's exposure to real estate - or, as his critics charge, worried that he had let real estate lending get out of hand - Mr. Clarke began a massive crackdown in 1989 and 1990 that touched off the credit crunch. Though controversial, he was nominated for another term by President Bush and is awaiting Senate confirmation.
OFFICE OF THRIFT SUPERVISION
1700 G St., N.W. Washington, D.C. 20552 202-906-6000
Director: T. Timothy Ryan Jr.
A branch of the Treasury Department, the Office of Thrift Supervision rose from the ashes of the now defunct Federal Home Loan Bank Board. It supervises the nation's 2,200 state-and federally chartered thrifts, as well as 100 institutions that have been placed in conservatorship. Unlike the Bank Board, however, the OTS is strictly a regulator. Supervision of the insurance fund and the district Home Loan Bank System, which fell under the purview of the Bank Board, have been parceled out to other agencies.
When it was created in 1989, the big question facing the OTS was how long it would survive. Led by Mr. Ryan, a lawyer who candidly told a hostile Senate Banking Committee at his confirmation hearing that he knew nothing about the thrift industry, the OTS was widely regarded as an interim agency that would be merged out of existence the next time Congress took up banking legislation. Since then, however, the agency and its director have begun to win some respect in Washington. Mr. Ryan focused directly on some issues that bothered thrifts - particularly the high assessments levied to pay for the agency - and complaints have begun to taper off. The politics of regulatory reform have proved more difficult than anyone imagined. A Bush administration proposal to reorganize the agencies was met with snickers, and a House Banking Committee effort to devise a substitute plan failed as well. As a result, the OTS may be around for a while.
NATIONAL CREDIT UNION ADMINISTRATION
1776 G St., N.W. Washington, D.C. 20456 202-682-9600
Chairman: Roger W. Jepson
The administration supervises the nation's 8,600 federally chartered credit unions. It insures credit unions, including the 4,500 state-chartered institutions, through its National Credit Union Share Insurance Fund.
The NCUA is Washington's invisible regulator, and likes it that way. It goes out of its way to hide in the shadows of the FDIC and OTS, and in doing so has been able to watch and learn from the mistakes of others. While banking regulators were being criticized for failing to catch the nation's real estate disaster, the NCUA began its own quiet crackdown on real estate loan portfolios. It also implemented rigorous training for examiners. And for the first time in seven years, its board voted to raised premiums to keep its fund safe and sound, and, more important, away from the jaundiced eyes of Congress.
RESOLUTION TRUST CORP.
801 17th St., N.W. Washington, D.C. 20434 202-416-9600
Chairman: L. William Seidman Chief Executive Officer: David C. Cooke
The RTC may be the nation's greatest management challenge since it geared up to fight World War II. Formed two years ago to oversee the savings and loan bailout, the agency has taken over assets with a book value of $328 billion, half of which have been sold so far. It is the nation's largest owner of junk
bonds, its largest holder of real estate, and its second-largest financial institution in terms of assets. It is due to expire in 1996, though many in Washington believe its life will be extended because of the sheer magnitude of the S&L bailout.
While almost everyone concedes the enormousness of the RTC's mission, the agency has become a whipping boy for Congress. Legislators who once worried out loud that the RTC would devastate local real estate markets in its haste to dump properties, now accuse the agency of holding on to assets too long. RTC officials are hauled before congressional committees at regular intervals to explain policies on minority contractors, environmentally sensitive or historically important properties, junk bonds, and a dozen other issues. At the same time, the agency has been whipsawed by the funding process, given more money than it could spend during its first three months of existence and too little in the years that followed. As a result, the Federal Deposit Insurance Corp., which manages the day-to-day affairs of the RTC, is taking pains to distance itself.
SENATE BANKING, HOUSING, AND URBAN AFFAIRS COMMITTEE
534 Dirksen Senate Office Building Washington, D.C. 20510 202-224-7391
Chairman: Donald W. Riegle, D-Mich. Staff Director: Stephen B. Harris
The committee has legislative and oversight authority for issues and agencies that deal with banks, thrifts, credit unions, securities firms, and insurance companies. Beyond that, its mandate includes urban affairs, mass transit, housing, financial support for commerce, and such apparently unrelated issues as the Defense Production Act. The panel also has the constitutional duty to advise and consent on presidential nominations for financial industry posts, from the secretary of the Treasury to the chairman and members of the Federal Deposit Insurance Corp.
In years past, it was said that banking legislation was written in the Senate and accepted by the House. The last time that was true was in 1987, when Chairman William Proxmire, D-Wis., hammered out 80% of the Competitive Equality Banking Act in committee and then sat back and waited for his House counterparts to ratify the panel's handiwork.
Lately, though, the panel has fallen on hard times, in large part because of Mr. Riegle's involvement with thrift operator Charles H. Keating Jr. Tarnished by a drawn-out ethics committee investigation into the "Keating Five" senators, Mr. Riegle has had a tough time leading. Mr. Riegle wanted a narrowly focused banking bill; his committee disagreed.
As a result, the banking community was treated to an unusual spectacle this summer when the committee considered major bank reform legislation: three full days of public sessions in which issues were raised, one at a time, and voted on. In the past, the panel has reached most decision privately.
* KEY SUBCOMMITTEES
CONSUMER AND REGULATORY
Alan Dixon, D-Ill., chairman
Kim Leslie Shafer, chief
counsel and staff director
HOUSING AND URBAN AFFAIRS
Alan Cranston, D-Calif.,
W. Donald Campbell, staff
HOUSE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
2129 Rayburn House Office Building Washington 20515-6050 202-225-4247
Chairman: Rep. Henry B. Gonzalez, D-Tex. Staff Director: Kelsay Meek General Counsel: Barbara Timmer Press Secretary: Joseph C. Lewis
The panel deals with issues involving banks, thrifts, and credit unions, including monetary policy, international finance and multinational lending agencies, and financial support for commerce and industry. It is also responsible for housing and urban affairs, defense production, and economic stabilization.
Once a slow-moving panel that kept ambitious lawmakers busy looking for a way out, the banking committee has come into its own under Chairman Henry B. Gonzalez. In the last Congress, the first two-year session with Mr. Gonzalez at the helm, the committee had no sooner completed work on the S&L bailout than it began a series of high-profile hearings on Charles Keating's Lincoln Savings and Loan. This year, it quickly took up the Bush administration's bank reform bill.
Moreover, with the end of the Reagan administration and its tightfisted approach to domestic spending, the panel is once again working on housing bills - the principal reason many lawmakers signed up for the panel in the first place. And for all the problems in the banking and thrift industries that command attention now, Mr. Gonzalez, a New Deal-style populist, has made sure the committee does not lose sight of the fact that it is the committee of banking, housing, and urban affairs.
Still, with taxpayers angry over the rising cost of the bailout, the panel is having trouble attracting freshman lawmakers, an ominous sign.
* SUBCOMMITTEES CONSUMER AFFAIRS AND COINAGE
202-225-8872 Rep. Esteban Torres, D-Calif., chairman Albert S. Jacquez, staff director
DOMESTIC MONETARY POLICY
202-226-7315 Rep. Stephen L. Neal, D-N.C., chairman Ben W. Crain, staff director
202-226-7511 Rep. Thomas R. Carper, D-Del., chairman Christophe Tulou, staff director
FINANCIAL INSTITUTIONS SUPERVISION, REGULATION, AND INSURANCE
202-226-3280 Rep. Frank Annunzio, D-Ill., chairman Curtis Prins, staff director
GENERAL OVERSIGHT AND INVESTIGATIONS
202-225-7504 Rep. Henry B. Gonzalez, D-Tex., chairman Frank DeStefano, staff director
INTERNATIONAL DEVELOPMENT, FINANCE, TRADE, AND MONETARY POLICY
202-225-7504 Rep. Mary Rose Oakar, D-Ohio, chairman Earl Rieger, staff director
HOUSING AND COMMUNITY DEVELOPMENT
202-225-7054 Rep. Henry B. Gonzalez, D-Tex., chairman Frank DeStefano, staff director