In 1989, three days after President Bush announced plans to intervene in the savings and loan crisis, Nicholas J. Ketcha Jr. was dispatched to Houston to lead the government's takeover of University Federal Savings.

The Federal Deposit Insurance Corp. veteran had no experience running a thrift, much less one with $4.6 billion in assets. "Our instructions were, 'Use your good judgment on this,' " Mr. Ketcha said. "There was no manual."

Today, Mr. Ketcha holds one of the agency's principal posts as director of supervision, the chief regulator of 6,400 state-chartered commercial and savings banks.

And while he is glad a calmer, more robust banking industry has replaced the crisis of the late 1980s and early 1990s, Mr. Ketcha has a slight nostalgia for the exhilaration regulators felt as they battled to stabilize the nation's banking system.

In many ways, the 53-year-old embodies the transitional period in which the FDIC and other banking agencies currently find themselves. After three decades in the trenches for the FDIC, Mr. Ketcha sounds like a Cold Warrior who's adjusting to a new world.

"I think in some regards this is a more difficult period," he said in an interview. "There tended to be more black and white issues. ... Now, we are facing things that are unknown. What is the new challenge? Are we preparing our people to deal with it?"

Entering 1997, industry profits and the insurance funds are healthy. Only five commercial banks and one thrift failed in 1996, compared with 328 failures in 1989 at the peak of the crisis. FDIC officials are taking a breath during this relatively calm period to assess history and prepare for the future.

The agency is scheduled to present several of 14 retrospective reports here today at its symposium entitled, "FDIC's History of the '80s - Lessons for the Future."

Recalling the real-estate investment debacles of the 1980s, regulators are looking for the next land mine that could cripple the banking system. Candidates include derivatives and accelerating credit card debt. In response, Mr. Ketcha's division is building teams of specialists in those areas as well as electronic commerce, fraud, and international banking.

Mr. Ketcha said his biggest concern is that banks, bowing to competition, are getting too lax on loan underwriting. Twice a year, the agency surveys the institutions it supervises to track underwriting practices.

Regulators face the dilemma of staying vigilant during the good times without turning into vigilantes. Exhibiting his fondness for humorous stories and quotes, Mr. Ketcha said: "It's hard to take the punch bowl away at the height of the party."

Yet in the early '80s, regulators let too much time pass between examinations, Mr. Ketcha said.

To stay alert while mollifying bankers, examiners are trying to improve the efficiency of exams and reduce the amount of time spent in banks. For instance, bank examiners are using new software programs to download loan data and study it in their field offices before visiting banks.

"We are on-site at the bank less of the time," Mr. Ketcha said. "But we are still doing a full-scope examination."

In preparation for interstate branching, which begins June 1, the FDIC will have case managers in its regional offices supervise banks operating in more than one region of the country. Officials hope using these managers will improve risk profiles of these large banks and communication with them and other banking agencies.

Examiners also want to deliver individual attention to institutions and practice preventive medicine. The FDIC is alerting the institutions it supervises to potential regional economic problems that could affect them, Mr. Ketcha explained.

The FDIC's research and insurance divisions are analyzing economic data and sharpening their ability to forecast failures in order to guide supervision officials. FDIC examiners can use this information in meetings with bank officials to warn of potential hazards such as overdevelopment of real estate, fluctuating commodity prices, and weather crises, Mr. Ketcha said. In such a case, examiners might suggest that a bank raise its capital.

"You are trying to be anticipatory of the problems without causing the problems," Mr. Ketcha said. "There is a balance that is needed."

Mr. Ketcha, who grew up in Archbald, Pa. - population 5,000 - started with the FDIC as an examiner trainee in New York in 1965 after graduating from the University of Scranton. He has spent his entire working life with the agency except for a two-year stint in the Navy in the late 1960s and one year in the corporate audit department of industrial giant Tenneco Inc. on a government exchange program. He rose to assistant regional director of supervision in New York, worked in the agency's Washington headquarters for four years in the mid-1980s, and returned to New York in 1988 as regional director of supervision.

Officials inside and outside the agency compliment Mr. Ketcha for his knowledge, experience, open style, and sense of the big picture.

"He's providing really solid leadership," said Leslie A. Woolley, the FDIC's deputy to the chairman for policy. "Besides that, he's really a great guy."

"I think he is a very practical and reasonable regulator," said James D. McLaughlin, director of regulatory and trust affairs for the American Bankers Association.

Mr. Ketcha also commands the respect of state regulators who must collaborate with him, said Neil D. Levin, superintendent of banks for the state of New York.

"Working with Nick has been very easy," said Mr. Levin, who teamed with Mr. Ketcha on the 1995 investigation of Japan-based Daiwa Bank, which hid $1.1 billion in securities trading losses at its New York office and was forced to close its U.S. operations.

Despite his affable nature, "he can also be a tough regulator," said Harry W. Van Sciver, president of the recently sold Burlington County Bank in New Jersey. When Burlington opened in 1988, Mr. Ketcha repeatedly pressured the bank to hire an experienced head lender, Mr. Van Sciver said.

Yet Mr. Ketcha almost didn't take his current job after being recruited heavily by FDIC Chairman Ricki Helfer in 1995. The two previous holders of the job, department veterans Paul Fritz and John W. Stone, had retired.

"If I had my druthers, I'd still be regional director in New York," Mr. Ketcha said, underscoring his reputation for candor. But Ms. Helfer was persuasive, he said.

Mr. Ketcha, who is married and has two grown daughters, lives in an apartment in Arlington, Va. He commutes on the weekends to his home in Princeton Junction, N.J.

Since his tenure began in June 1995, Mr. Ketcha has overseen reorganization of the supervisory division and been credited with increasing cooperation among the agency's various units. Although not hardest hit by the FDIC's job cuts, the forces under Mr. Ketcha have dropped to about 2,700 employees, down from more than 3,000 at the end of 1995.

In the last year, five new regional directors have been promoted at the FDIC, and new deputy and assistant deputy managers of supervision abound in Washington.

He expressed hope that internal upheaval will subside and new initiatives will gel in 1997.

Mr. Ketcha said regulators should not be lulled by this quiet period. Although the banking crisis of a few years ago may have been an extreme, regulators must be prepared for the inevitable down cycle in the industry, Mr. Ketcha cautioned. "Good times don't last forever."

But when the bad times hit, Mr. Ketcha may not be around to help. He intends to retire at the end of 1998. Though professing uncertainty about what he'll do next, he mentioned he is an avid gardener with more than 200 house plants and that he enjoys golf and snow skiing.

Whether he can enjoy the slow pace of retirement remains to be seen. "Everybody who knows my personality says I will go nuts in six months," he said.

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