WASHINGTON — John Bovenzi came full circle in three decades at the Federal Deposit Insurance Corp.
Shortly after joining the agency in 1981, he watched the FDIC's size, workload and powers dramatically expand as the savings and loan crisis occurred. After it was over, Bovenzi helped implement the agency's massive downsizing.
But when he left the agency late last month, it was ascendent once again, increasing its manpower and facing both a raft of new failures and congressional consideration of an even bigger expansion of authority that would include nonbanks.
"In many ways, … it's like history repeating itself," Bovenzi, the agency's top career official for the last 10 years, said last month in an interview in his FDIC office.
The current crisis is "much deeper and broader" than the savings and loan debacle, "but for the FDIC, in many ways, it's similar," he said. "The agency has had to adjust rapidly."
It may be fitting that the 28-year agency veteran has chosen now to try something new. On Monday, Bovenzi, 56, will join the financial services consulting practice of Oliver Wyman, a subsidiary of Marsh & McLennan Cos. He will advise companies on regulatory issues and help countries devise FDIC-like models for their banking systems.
"I said to myself, 'I do want a second career at some point,' " he said.
Bovenzi, known for unflinching calmness even in times of pressure, started at the FDIC as a deputy director in the research division and soon was entrenched in major policy issues facing the agency's leadership. In 1993 he took the reins of what soon became the division of resolutions and receiverships. He took on his last job at the agency — chief operating officer — in 1999.
He has played a critical role during the current crisis, including a brief stint as the head of IndyMac Bank after the FDIC seized it last year.
Bovenzi quickly saw the limits of the agency's powers. In the early 1980s the FDIC, which had mostly dealt with small bank failures, suddenly was facing difficult closures of large institutions in Texas.
"It was like today, with things going 100 miles an hour and an issue every few minutes," he said. "The FDIC didn't have a good mechanism for closing a large bank. It used open bank assistance, which … proved problematic, because you were negotiating with shareholders and bondholders about appropriate terms. They were difficult transactions to get done."
As a result, Bovenzi said, the agency received authority in 1987 to fold a failed bank's assets into bridge banks. But the tinkering did not end there. By 1989 then-Chairman L. William Seidman was running both the FDIC and the Resolution Trust Corp, and the FDIC was asked to take over the duties of the Federal Savings and Loan Insurance Corp.
Bovenzi said the debates about the FDIC's authority and which institutions were to blame for crises are repeating themselves today. "You had the outcry about 'too big to fail' and disparate treatment," and "you saw this tension between large and small banks … a lot of the same kinds of issues that we're seeing this time around."
Likewise, an evolving crisis has led to calls for new powers, such as the authority to seize holding companies in addition to banks. Bovenzi said the agency of late has had to scramble in cases where resolving the entire organization would otherwise be smoother.
"You're seeing the same kind of creativity this time around" that the agency used in the previous crisis, but "certainly broader powers in the area of closing financial institutions would be helpful," he said. "At the FDIC, we have clear authority, but it's clear authority for the insured depository institution, not the broader entity. But the affiliates and holding companies, they don't operate separately, and that complicates the resolution."
Bovenzi also saw the agency's work force grow exponentially. At its height, the FDIC and RTC combined had 23,000 employees. As a division director and later chief operating officer, he was a central figure in a painful downsizing. The RTC disbanded, and the FDIC cut staff positions steadily as demand for its crisis response mechanism waned. By 2006 the agency had just 4,500 employees.
He cited the downsizing as one of the more challenging issues he dealt with at the agency.
"We had to let people go — people who had been with the FDIC for many years," he said. "That was a very difficult period for everybody."
Now, with another stream of failures, manpower additions are back on the upswing.
The agency has sought retirees — veterans from the last crisis — to return on a non-full-time or contractual basis, and it has opened temporary satellite offices. It now has roughly 5,500 employees, and its current budget authority calls for 6,300.
At a reception on his last day there, Bovenzi reflected on his lifetime at the agency, which has included points that have tested his calmness. He recalled, for example, having to tell a sitting U.S. president in the last crisis that the Bank Insurance Fund was nearly broke.
"If there's anything I've learned, it's that government work isn't for sissies," he said.
