An imminent departure from the Office of the Comptroller of the Currency is expected to leave its top policymaking position in derivatives vacant until after the November election.
No names have surfaced as possible successors to Douglas Harris, deputy comptroller for capital markets. But observers say the agency probably will seek someone with private-sector credentials, as Mr. Harris has. Before joining the OCC he was in charge of futures operations at J.P. Morgan & Co.
"I would expect the Comptroller's Office would want someone with Doug's type of qualifications so the agency can be at the forefront of framing the issues in this market," said Paul L. Lee, general counsel of Republic New York Corp.
Mr. Lee and others said the appointment of Mr. Harris in 1993 was fortunate for the over-the-counter derivatives market in the United States.
"He was hired at a time when derivatives and off-balance-sheet items were becoming important issues from a regulatory standpoint," said Richard Whiting, general counsel and senior director with the Bankers Roundtable in Washington. "It was absolutely critical for the OCC to get up to speed on this."
At the OCC, Mr. Harris is best known for the October 1993 issuance of Banking Circular 277, which gave examiners and banks their first guidance on managing the risks of derivatives products.
A year later, Mr. Harris' office issued an advisory notice on the use of structured notes, again the first such regulatory move in this area.
His latest ruling is expected to put commercial banks on an even footing in the derivatives business.
Earlier this month, NationsBank Corp. was the first U.S. commercial bank to receive regulatory authority to establish a separately capitalized, triple-A-rated derivatives products company. The subsidiary will allow the bank to compete with securities firms and foreign banks marketing derivatives to end users who are unable to post and collect collateral. Previous applications had been withdrawn without approval from the agency.
Mr. Whiting said the agency has also undergone a "rather profound and dramatic change" in the way it performs its examinations since Mr. Harris' arrival.
"He has worked along with other regulators to foster a regulatory approach that depends less on quantitative measures of performance and compliance to one more concerned with qualitative factors like management involvement," he said.
Late last year, Mr. Harris was touted as a possible replacement for Mary Schapiro, the departing chairwoman of the Commodity Futures Trading Commission. The White House gave the nod to Washington attorney Brooksley Born, but now the confirmation process is on hold.
For now, the departing deputy comptroller said he is looking for a position in the private sector when he leaves on June 21. He said his only plans are to return to New York.
"I want to get closer to the transactions and the deals," he said. "It's just time to get back."