Kansas could be without a banking commissioner for months while state lawmakers reconsider the state's policy of appointing full-time bankers as top regulators.
The state Legislature's joint committee on banking recommended last week that Kansas no longer let whoever is its banking commissioner simultaneously work for a bank. Iowa is the only other state that permits a full-time banker to be commissioner.
The recommendation prompted the unexpected resignation of Commissioner W. Newton Male, who was Kansas' top regulator for seven years while chairman of Prairie State Bank.
Sources have said Mr. Male, who owns 25% of the bank with his daughters, viewed the legislative proposal as a personal attack.
He did not return calls to his bank seeking comment.
Gov. Bill Graves may have a hard time finding a successor to Mr. Male, who was liked and respected by those he regulated, bankers and trade group representatives said.
J. Sue Anderson, executive director of the Community Bankers Association of Kansas, said an active banker may be reluctant to accept the post with the Legislature about to review the rules governing it.
"With all of this controversy, it might be tough to find someone," she said.
The legislative session begins in January.
Should the governor suggest an active banker, the nominee would have to get past state Sen. Don Steffes, chairman of the Banking Committee and champion of reforming the commissioner's job criteria. Sen. Steffes, whose committee must approve the governor's candidate, said he would not support anyone who plans to keep his or her banking job.
"Any commissioner is going to be closely scrutinized," said Sen. Steffes, a former banker and past president of the Kansas Bankers Association. "A banker is inappropriate, even if there's a saint out there."
Sen. Steffes said he hopes Gov. Graves will wait to appoint a commissioner until after the Legislature has a chance to act on his proposal.
A spokesman for the governor said a search for a commissioner is under way. In the meantime, Judi Stork, a former deputy commissioner, is acting commissioner.
Sen. Steffes denied that his move to reform the commissioner's job was directed personally at Mr. Male, but the two have a history of conflict. Three years ago Mr. Male and the state's banking lobby successfully opposed Sen. Steffes' proposal to let Kansas public deposits be put in out-of-state banks.
During the 1998 session Sen. Steffes countered with a measure that closed a tax loophole many banks-including Mr. Male's-had taken advantage of. Sen. Steffes said Mr. Male had had an obligation to state lawmakers to tell them that some state-chartered banks avoided paying $36 million in taxes by creating investment subsidiaries.
The state's two bank trade groups maintain that the latest move to change requirements for the commissioner's job is unnecessary.
"Our banking department is 110 years old, and there has never even been a hint of a scandal," said Jim Maag, executive vice president of the Kansas Bankers Association.
Sen. Steffes said he hopes bankers will change their position and support his reforms.
"I am so hopeful that they will want to work with us," he said. "We need to move more in line with what's happening in the rest of the nation." u
