The banking industry is elated at the prospect of one of its own -- Frank Newman -- moving up in the Clinton administration.
The White House is expected to soon nominate Mr. Newman as the successor to Roger Altman, who on Wednesday resigned as deputy Treasury secretary over his role in the Whitewater controversy.
Mr. Newman's nomination is expected to easily win Senate confirmation.
After a career in banking that began in transaction technology with Citicorp's John Reed in 1969, the soft-spoken Mr. Newman became under secretary of the Treasury for domestic finance early last year.
Since then, Mr. Newman has labored to consolidate the banking agencies, promote interstate banking, and create a network of community development banks.
The step up to deputy secretary will move Mr. Newman closer to Treasury Secretary Lloyd Bentsen and expand his power over which issues the department embraces.
Richard S. Carnell, Mr. Newman's assistant, could move up to under secretary. Mr. Carnell, who came to the department from the Senate Banking Committee, works closely with Mr. Newman. Mr. Carnell is out of the country on vacation until Sept. 5.
In recommending Mr. Newman's promotion, Mr. Bentsen called him "a talented, knowledgeable individual, well respected throughout the business and financial community, in government and in Congress."
Banking industry leaders were also enthusiastic. "The great thing about Newman ... is he is very knowledgeable about the whole financial system, not just banking," said Edward Yingling, the American Bankers Association's top lobbyist. "He can sit in meetings with other, high-level administration officials and say, 'This is the way it really works out there.'
"Anyone who can explain the real world to them is just helpful by definition." While wary that years at behemoth BankAmerica Corp. would bias Mr. Newman against community bank concerns, Kenneth A. Guenther, executive vice president at the Independent Bankers Association of America, said Mr, Newman has "shown some considerable small-bank sympathies."
In an interview Thursday, Mr. Newman agreed, "It's always helpful to have someone in a senior position... who understands the industry." He quickly added that his experience will not always lead him to decisions that benefit banks.
But he did reiterate his intention to champion one cause bankers back wholeheartedly: expansion of community reinvestment rules to less-regulated competitors.
"Other financial service providers need to adhere to fair lending laws and some kind of community responsibility concept," Mr. Newman said.
The Treasury Department will soon launch a wide-ranging, 15-month study on the future of financial services that will encompass this question as well as ways to modernize the laws governing banking, he said.
Mr. Newman had impressive success this year moving banking legislation through Congress. He is widely given credit for passage of a regulatory relief package for banks in the recently approved community development bank bill.
Many banking sources said Mr. Newman took the smart track on banking legislation this year by attempting what was possible, rather than going for a comprehensive package.
"The Newman approach was pragmatic: Let's go for what we can get," said Mr. Guenther.
This year was easily the industry's best on Capitol Hill in a long time. The community development bank bill was transformed from something the industry opposed to a purely positive piece of legislation, complete with a raft of measures to reduce banks' regulatory burden.
Mr. Newman said the community development bill "eliminates needless burdens on the industry while at the same time insisting that it lend fairly and meet its responsibilities to the community."
Also expected to pass this session is interstate banking, which Mr. Newman said should save the industry money by increasing its efficiency.
On the table for next year is another stab at merging the four banking regulators. The legislation was torpedoed this year by the Federal Reserve, which refused to give up as much authority as the Treasury Department requested. But the two sides came close to a compromise that could be sealed next year.
Mr. Newman also said he will work on reforming the Federal Home Loan Bank System.
The administration has been considering restructuring the system, making membership voluntary, and stabilizing its capital
base. Mr. Newman said.
Another issue on Mr. Newman's plate is the coming disparity in the rates banks and thrifts pay for deposit insurance.
The Clinton administration is worded about another industry crisis developing if thrifts are forced to pay four times what banks pay for insurance.
"It's very easy for people to take an extremely strong position" on the premium question, he said. The Treasury Department has not made any decisions on this, but "we want to look at it carefully," he said.
Finally, Mr. Newman will have a hand in any legislative attempt to modernize banking laws governing securities and insurance activities. "The whole nature of the system is changing the kinds of services that insured financial institutions and others ... can provide and the ways in which they are regulated," he said.
Mr. Newman graduated magna cum laude with a degree in economics from Harvard in 1963.
After his work with Mr. Reed when Citicorp was National City Corp., Mr. Newman was a manager at Peat, Marwick in Boston. Moving west in 1973, Mr. Newman joined Wells Fargo & Co., where he worked until 1986. That year, Mr. Newman jumped to BankAmerica as vice chairman and chief financial officer -- the position he held when he was appointed to the Treasury Department by President Clinton.