The banking industry has only itself to blame for the fact that a banker will not fill one of two openings at the Federal Reserve Board.
The industry never coalesced behind a candidate.
"I don't know if the industry blew it," Consumer Bankers Association president Joe Belew said. "But if the story is that there was not a concerted effort, then that is probably true."
Not that getting a banker on the Fed board would have been easy. The central bank is historically reserved for economists, particularly former members of the Council of Economic Advisers. President Reagan's appointment of former Shawmut National Bank chairman John P. LaWare was the exception rather than the rule.
Also, it isn't easy finding Democratic bankers who are right for the job. Several trade group officials said the administration clearly wanted someone with stature-such as former BankAmerica Corp. chairman Richard M. Rosenberg or Wachovia Corp. chairman John G. Medlin Jr.-but such executives aren't interested in playing second-fiddle to the Fed chairman.
Executives also would have to sell their bank stock and cash in stock options and pay huge capital gains taxes.
These are formidable obstacles. But the Fed is important to banking. It regulates holding companies, supervises state member banks, operates the payment system, and plays a key role in the debate over financial modernization. One would expect the industry to want one of its own on board.
"This got screwed up," one industry official said. "There was a failure on the part of the trade groups."
Banking groups never identified a slate of bankers who were willing to take the job. Instead, they gave the Treasury Department lists of bankers who either recently retired or lost their jobs during mergers. The industry never even agreed on a single package of eligible candidates-each group submitted its own roster.
"There was never anyone the industry backed," another industry official said. "We get what we deserve."
The industry also failed to follow up with forceful lobbying. Trade group leaders said that while they wanted a banker, they felt their time was better spent fighting other battles.
"We strongly encouraged them" to appoint a banker, said James D. McLaughlin, director of regulatory and trust affairs at the American Bankers Association. "But did we do a grassroots lobbying campaign? Of course not. We save our grassroots campaigns for very important legislative efforts."
Trade group leaders also never considered a bank economist for the job, figuring economists lack an inside knowledge of how regulations affect business.
But it would have been much easier to convince a leading bank economist to take the job. Economists have much smaller stock and options portfolios and are likely to have fewer problems adjusting to life under Chairman Alan Greenspan than a chief executive.
Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America, said the industry never had a chance.
Deputy Treasury Secretary Lawrence H. Summers pushed his friend Roger W. Ferguson Jr., a McKinsey & Co. consultant who provides advice to banks. "The deputy treasury secretary connection made sure his resume got to the top of the pile," Mr. Guenther said.