WASHINGTON - The Bush administration this week considered a maneuver that would have given it control of the Federal Deposit Insurance Corp.'s board, but rejected the idea as politically unfeasible, sources said Wednesday.
The fact that high-level discussions were held in the midst of the President's reelection campaign underscores the administration's concern over the possibility of split votes by the four-member board in the wake of the sudden death of chairman William Taylor.'
The agency has key decisions pending on a number of issues that could affect the fragile economic recovery. Among them: a deposit insurance premium hike and real estate lending limits.
Ryan Proposed for FDIC
Under one scenario, Andrew C. Hove Jr. would have been replaced as acting chairman by Timothy Ryan, director of the Office of Thrift Supervision. Mr. Ryan's existing seat on the board would have then been turned over to a Treasury Department appointee, giving the administration a three-vote majority.
But the administration, which was still considering the idea Wednesday, rejected it late in the day, sources said.
Treasury Department officials and Mr. Ryan declined to comment.
Mr. Hove, the agency's vice chairman since July 1990, moved up to the agency's top job on Aug. 20 upon Mr. Taylor's death. Mr. Hove is supporting a 22% increase in deposit insurance premiums, which the administration opposes.
The behind-the-scenes debate was news to Mr. Hove.
"I have not heard anything about it," he said. "I'm sure I would not be one that they'd consult."
The FDIC proposed a 22% premium hike in May and had scheduled a final vote on the increase for Sept. 1. Had Mr. Taylor lived, there is little doubt the increase would have passed by a 3-to-2 vote, with Mr. Hove and director C.C. Hope siding with the late chairman.
But Mr. Ryan, along with acting Comptroller of the Currency Stephen Steinbrink, asked that the vote bc delayed. Mr. Hove pushed the vote back to Sept. 15, but in a speech Monday the former Nebraska banker made it clear that premiums must be increased if the FDIC is to rebuild the Bank Insurance Fund.
A permanent FDIC chairman is not likely to be appointed until after the elections. But the administration could bump Mr. Hove from the role of acting chairman this week by making a so-called a recess appointment before Congress returns from its summer break.
Another option is to make a "vacancy" appointment, which allows the President to appoint for 120 days anyone who has been confirmed by the Senate to another administration post.