Arthur J. Murton is the Federal Deposit Insurance Corp.'s crystal ball.
As director of the agency's division of insurance, Mr. Murton is responsible for spotting economic trends that could threaten banks and thrifts, as well as the FDIC-managed funds that insure them.
Mr. Murton watched carefully as the Dow Jones industrial average fell 554 points Monday and rebounded Tuesday, but he says no one knows yet whether the swings signal changes in the economy that could hurt banks.
"The overall health of the industry depends more on the fundamental economic forces at work than the short-term volatility in the market," he says.
Mr. Murton's division is supposed to bridge the gap between the big- picture view of the agency's researchers and its examiners' micro view of individual institutions.
His division is giving examiners quarterly reports on conditions in their regions that cover trends such as consumer credit delinquency, bankruptcy rates, and construction-and their impact on asset and credit quality.
Mr. Murton also sets the agency's risk-based premiums-a task that is getting tougher now that 95% of all banks pay the lowest rate.
By mid-1998, Mr. Murton aims to come up with ways to sharpen the agency's criteria for assessing premiums, such as expanding the matrix used to slot banks into various premium rates. The matrix scores an institution's capital reserves against its supervisory ratings. Changes could include adding more variables such as debt ratings or subdividing the three existing supervisory categories.
Premium assessments will be among the many topics at the Jan. 29 symposium that Mr. Murton is organizing on the role of deposit insurance in a changing financial world.
The program will focus on combining the bank and thrift insurance funds and on the proper scope of deposit insurance if Congress permits banks to merge with securities and insurance firms. The agency also says it will confront reform plans by the Bankers Roundtable and other critics that would scale back deposit insurance.
Mr. Murton, 40, joined the FDIC in 1986. Before starting the insurance division last year, he was the No. 2 man in the agency's research division. His former boss, research director William R. Watson, lauds Mr. Murton's commonsense approach to matters.
James H. Chessen, the American Bankers Association's chief economist and a former FDIC researcher, says: "He's the guy that not only knows the forest but knows the trees."
Not everyone has greeted the division so favorably.
While other units of the FDIC are being scaled back, the insurance division's expansion to 55 employees reportedly has rubbed some within the agency the wrong way. Several skeptics have questioned whether the insurance and research divisions are redundant, Mr. Murton and Mr. Watson say. They dispute that notion.
Former FDIC Chairman Ricki Helfer was the chief advocate of Mr. Murton's division. However, insiders say, the division has the backing of the board and acting Chairman Andrew C. Hove Jr.
"This year we are going to make a lot of progress," Mr. Murton said. "I hope by 1998 people are saying, 'Why didn't we do this before?'"