WASHINGTON -- The interim head of the Federal Deposit Insurance Corp. said Wednesday that he intends to press ahead for a premium hike on Jan. 1.
But the official, Andrew C. Hove Jr., left open the possibility that an increase might be smaller than the one proposed by the agency in May.
In his first interview since assuming the agency's reins last week, Mr. Hove sought to dispel speculation that the sudden death of William Taylor would leave the agency rudderless and susceptible to political pressure.
"I intend not to be a caretaker," Mr. Hove said. "I'm going to do the things that I think are best for the banking industry and best for the FDIC.
"And if that puts me in conflict with the administration or with the Congress, so be it."
Mr. Hove's tough talk belied the mild-mannered image he has projected since becoming the agency's vice chairman in July 1990.
Whereas it had been clear that no one would push around the independent-minded Mr. Taylor, there was speculation that the 57-year-old Mr. Hove, a former community banker, might end up as a caretaker.
Mr. Hove is expected to serve as acting chairman at least through yearend because there is no time left on the congressional calendar to get a new FDIC chief confirmed.
Meanwhile, the agency faces a busy and crucial six months in which it must complete a half-dozen regulations required by the FDIC Improvements Act of 1991.
Among the coming rules: minimum standards for real estate underwriting, an interest-rate risk component for bank capital, and procedures for regulatory intervention in a bank as its capital position declines.
The first issue facing Mr. Hove is the proposed premium hike, for which Mr. Taylor was the driving force.
Banks currently pay a flat 23 cents for each $100 of domestic-deposits. In May, the FDIC board proposed charging premiums according to a bank's risk profile and increasing the average fee by 22% to 28 cents.
The May vote was 3 to 2 with Mr. Taylor, Mr. Hove, and C.C. Hope favoring of the increase. T. Timothy Ryan, the director of the Office of Thrift Supervision, and Stephen Steinbrink, acting comptroller of the currency, opposed it. Both said at the time, however, that they support an increase to 27 cents.
Smaller Hike Possible
In the interview, Mr. Hove said the premium could rise less than the contemplated 22% average.
He said when the FDIC board meets next Tuesday to take a final vote on the premium hike, members will be looking at fresh figures prepared by FDIC's research staff.
Industry leaders have criticized the FDIC for relying on outdated forecasts. The FDIC has not revised its official predictions since October, when forecasts were based on data from the second quarter of 1991.
"Our researchers are doing a fresh look," Mr. Hove said, nothing that they will consider the record $7.6 billion earned by the industry in the first quarter.
While admitting that using more recent figures could weaken the argument for a premium increase, Mr. Hove added forcefully: "We still have a whole lot of assets [on the problem bank list] and we still have a whole lot of question marks, particularly on the West Coast, that we haven't addressed yet."
Expenses Not Covered
Mr. Hove is influenced by the same reasoning that drove Mr. Taylor: Since 1983 the FDIC's yearly expenses have outstripped annual income. Eight years of deficit spending left the Bank Insurance Fund $7 billion in the red at yearend 1991.
The 1991 FDIC Improvement Act requires the Bank Insurance Fund to hold $1.25 for every $100 in deposits by 2006, Mr. Hove noted.
"So sometime in the next 15 years, we've got to get a positive $30 billion swing," he said. "That's a lot of money even over 15 years.
But with just four members on the FDIC board, tie votes are possible, which could lead to gridlock. The premium increase will provide the first test of Mr. Hove's leadership.
Will Mr. Hove and Mr. Hope remain steadfast at 28 cents, while Mr. Ryan and Mr. Steinbrink cling to 27 cents?
"I intend to put forth my views, but I'm willing to make compromises if I think compromises are appropriate," Mr. Hove said. "So I don't think we are going to have 2-2 votes."
Banking industry representatives in Washington are concerned that the departure of Mr. Taylor gives the Treasury Department an opening to take over another banking agency. Both OTS and the Comptroller of the Currency are bureaus of the Treasury.
As part of the administration's campaign to end the credit crunch, Treasury, led by Deputy Secretary John Robson, has been urging the regulators to ease up on banks.
Mr. Hove said he is not worried that Treasury will co-opt the FDIC.
"I respect Tim Ryan [of OTS] and [Comptroller] Steve Steinbrink very much. And I think that both of those guys are independent enough that they're not going to be dictated to by anyone."
Some observers privately question whether Mr. Hove is up to his new job.
"He's an awfully nice guy, but so far he's been fairly undistinguished in his performance at the FDIC," said one trade group official. "He's a go-along type."
Others expect he will rise to the occasion.
"Don't paint this man as a pussycat," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America. "He can be quite tough."
Jim McLaughlin, director of agency relations at the American Bankers Association, added, "Skip is not a person to be underestimated."
Former Comptroller Robert Clarke, who sat with Mr. Hove on the FDIC board, described him as "every independent-minded."
30 Years at Family Bank
Before joining the FDIC, Mr. Hove spent 30 years with Minden Exchange Bank and Trust Co., a $90 million-asset bank his family owned in Minden, Neb.
When Mr. Hove was in junior high school, he went to work as the bank's janitor. He rose to chairman and president, a position his father held before him. Mr. Hove sold the bank when he became a regulator.
He is still called "Skip," despite three attempts over his lifetime to shake the nickname. He is married and has three grown children.
