G. Scott Calhoun can't read tea leaves, but he's been tapped by Comptroller of the Currency Eugene A. Ludwig to tell the banking industry's fortunes.

The 41-year-old examiner in charge at Citibank is the agency's first deputy comptroller for risk evaluation. As such, he will scour exam reports to identify overarching risks threatening the national bank system.

"I'm going to spend my time looking at the banking landscape, and packaging all the pieces of information from examinations into a bigger picture," the 19-year agency veteran said in a recent interview.

Chairing the agency's newly formed National Risk Committee, Mr. Calhoun also will devise regulatory responses to these risks and then follow up to make sure the agency's actions were effective.

Appointing a "risk czar" is the latest step in Mr. Ludwig's push to modernize national bank supervision.

Over the past two years, the Office of the Comptroller of the Currency has been moving away from the loan analysis exams of yesteryear. The new emphasis is on quality bank management.

Under the agency's new supervision by risk program, examiners assess which of nine risks most bedevil a particular national bank and then zero in on how well the institution manages those threats.

Mr. Ludwig wanted one person, reporting directly to him, to make sure the agency is marshalling the information flowing from these individual exams.

"Examiners are looking at risks from the bottom up, but we needed someone to look at them from the top down; and that's Scott's job," said Susan F. Krause, senior deputy comptroller for bank supervision policy and a chief architect of supervision by risk.

Though named to the new position in June, Mr. Calhoun is still doing his job at Citibank. He will probably make the move from New York to Washington next month.

For now, Mr. Calhoun continues to fly to Washington weekly to brief Mr. Ludwig on the state of affairs at the largest national bank. Bird dogging Citibank since 1992, Mr. Calhoun has first-hand experience on the transition to supervision by risk, which took effect Jan. 1 for large national banks.

Mr. Calhoun said the modernized exams are a hit for supervisors and bankers alike. "We don't spend all of our energy arguing about an individual loan classification anymore," Mr. Calhoun said. "Rather, at the end of the day, we're asking, 'What is the quality of management and underwriting?'"

Because the OCC has clearly defined the risks with which it is concerned, bankers don't dread exams as much as they used to, he noted.

"Bankers know exactly what to expect from us," Mr. Calhoun said. "The quality of understanding and dialogue between the industry and our organization has dramatically improved as a result of this."

While he hasn't officially taken up the reins of his new position, Mr. Calhoun is already casting his gaze across the 2,800 banks his agency supervises to identify areas of potential risk.

A cautious man, Mr. Calhoun skirted questions during the interview about the risks facing banking today. He did express concern that bank cost- cutting could erode internal controls.

"In the drive to be more efficient, they shouldn't cut into some of the core basic internal controls," Mr. Calhoun warned.

Mr. Calhoun pointed out another potential hazard to the banking industry - the legislative brick wall that banks often run into when trying to expand into new lines of business, such as insurance or securities sales.

"A limitation on what you can and can't do to generate revenue hinders diversification, and diversification is one way to really reduce risk in an institution," Mr. Calhoun said.

Mr. Calhoun said he isn't very worried about losses stemming from credit card lending, the area most experts are fretting over today. National banks that offer credit cards are amply prepared, according to Mr. Calhoun.

"Credit cards are a product that have been pretty effectively priced for risk," he said. "Do we foresee some big meltdown in credit cards? No. Do we think it is a profitability issue? The answer is probably, yes."

As the first deputy comptroller for risk evaluation, Mr. Calhoun will be able to shape his job as he sees fit.

Mr. Calhoun has no staff, and he can't see into the future. But he said he'll be well-armed to wave a red flag as soon as any risk trends crop up in national banks.

As the chairman of National Risk Committee, which is still being formed, Mr. Calhoun will periodically powwow with a group of senior OCC officials in Washington to identify emerging risks. He also intends to remain in close contact with the numerous bankers and OCC examiners he has come to know since joining the agency in 1977.

"I don't think I've been given real rigid lines about what I can and can't do," he said. "This is exciting ... it's an opportunity to develop a job."

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