There is a new sheriff at the Federal Reserve Bank of Chicago.
John J. Wixted Jr. takes over today as senior vice president for supervision. The former top regulator at the Federal Reserve Bank of Cleveland now supervises Chicago's 210 examiners, who are responsible for 212 banks and 1,100 holding companies.
Mr. Wixted replaces Franklin D. Dreyer, who retired after nearly four decades with the Chicago Fed, including eight years in the top post.
Mr. Wixted said he plans to emphasize self-regulation in the region, which includes Illinois, Iowa, Michigan, Wisconsin, and Indiana.
"There is just not enough hours in the day" to catch every problem, he said. "We've got to push this down to the directors and senior management. They have to be the first line of defense."
The Fed will hold training sessions to teach bank directors how to spot problems. "The idea here is to have the directors ask the right questions to senior management," Mr. Wixted said.
Automation also is high on his agenda. The Chicago Fed is spearheading the creation of Examiner Workstation, a software program that allows supervisors to download a bank's lending and investment portfolio records. The data then can be analyzed at the field office, reducing time that Fed personnel must spend at the bank.
"We are hoping to make the supervisory process more efficient and less intrusive," he said.
Mr. Wixted sees few significant regulatory problems on the horizon. Although delinquency rates and losses on consumer loan portfolios are rising, the increase hasn't been dramatic and some banks are responding by tightening underwriting standards, he said. "They are not in the red zone," he said, "but it may be in the yellow."
Mr. Wixted is concerned that banks are getting carried away financing suburban strip malls and office complexes.
"You have to wonder if we need all that square footage of retail space," he said. "This is something we need to keep an eye on."
Mr. Wixted also said he sees no reason for the agencies to regulate stored-value cards. The products are no different from traveler's checks, which few regulations cover. "We don't overregulate paper stored value, so I don't think we want to step in here," he said.
Mr. Dreyer has played a central role in regulating the region's banks since 1958. The first two decades were quiet, but then interest rate ceilings were eliminated and "that made things interesting," said Mr. Dreyer, who said he will play golf for several months before deciding his plans.