From his offices in the Washington suburbs, Bert Ely, 52, produces Washington's most respected statistical and economic analysis of the thrift and banking industry.

He is best known for having correctly predicted the savings and loan crisis years before Congress began work on the 1989 bailout. He won further respect for debunking the "December surprise," the notion, popular in Democratic circles, that massive bank failures were being delayed until just after the 1992 presidential election.

At a time when nearly everyone thought it would be well into the next century before the Bank Insurance Fund recapitalized, Mr. Ely said it would happen in 1995 or 1996. Today, the Federal Deposit Insurance Corp. agrees that 1996 is the right year.

Mr. Ely is quoted in newspapers nationwide on an array of banking issues. In fact, reporters on the banking beat have been known to shy away from calling him for short periods just so it won't look like they never talk to anyone else.

But for all his triumphs in predicting industry booms and busts, Mr. Ely has been less successful at prescribing a policy solution. His pet project is promoting "cross guarantees," a system in which financial institutions would play a role in insuring one another.

So far, his idea has received next to no attention on Capitol Hill.

Mr. Ely started his private consulting business 22 years ago and now divides his time between among consulting projects, speeches, and service testifying as an expert witness in court cases nationwide. Unlike many consultants, he has never been a lobbyist.

His philosophy? "I take positions, and then let the positions generate the clients. I am never doing work in which I am in personal disagreement, never have," he said.

"It is one of the reasons I am on my own; I don't have to worry about what someone else thinks."

Call it a Midwestern independent streak. Mr. Ely grew up in Cleveland and got his bachelor's degree in economics and accounting from Case Western Reserve University. He then worked for nearly two years as an auditor for Ernst & Ernst. He spent time in the Army, then was off to Harvard Business School, where he got his master's degree in business administration in 1968.

Ironically, one of his instructors was Robert Glauber, who later became under secretary of the Treasury during the Bush administration. From that vantage point, Mr. Glauber defended himself from Mr. Ely's charge -- correct as it turned out -- that the administration was seeking too little money for the bailout.

At times, Mr. Glauber was known to grumble that Mr. Ely must not have paid sufficient attention while in his class.

When he hung out his own shingle, Mr. Ely worked first as a small-business consultant and later began specializing in insolvency cases, both big and small.

"In a sense, the S&L crisis is just a big bankruptcy case," Mr. Ely said.

Although best known for his work on thrift and bank issues, he follows all sectors of the financial services industry. In fact, bankers will be glad to hear his latest prediction: There is an upcoming disaster, but it won't be in the banking industry.

"The next crisis is going to come outside the banking system," he said. He gives the crisis 50-50 odds to show its face by the end of next year.

It could be in mutual funds, securitized assets, commercial paper, derivatives, finance companies, or with broker-dealers, but some segment of companies that "arbitrage banking regulation" will blow up, he said.

So what's next for Bert Ely? He's 35,000 words down the path to writing his first book. Its working title is "All Roads Lead to Cross Guarantees: The Cross Guarantee Concept for Modernizing Bank Regulation."

Bert Ely

Financial institutions consultant

Ely & Co. Inc.

803 Prince St.

Alexandria, Va. 22314


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