Next week, a key behind-the-scenes player in New York banking will pass from the scene.

John F. Lee is hardly a household name, but over the past two decades he has helped to build consensus among the city's largest banks from his perch at the powerful New York Clearing House.

Originally set up as a central site for New York banks to exchange checks, the clearing house now plays a major role in the processing of international transactions, thanks in part to Mr. Lee.

It operates a computerized network that processes more than $1 trillion dollars in payments a day. The system, called Chips, is Mr. Lee's baby.

Submerging His Own Ego

The organization is also the chief lobbying arm for New York's largest banks. That has left Mr. Lee with the unenviable task of having to please 11 chief executives simultaneously - and to find common ground among giant institutions whose interests often diverge. The fact that he has lasted in the job for 26 years is telling evidence of his ability to work with massive egos while keeping his own submerged.

Now, after years of rubbing elbows with financial heavyweights like Felix Rohatyn, Walter B. Wriston, and Paul Volcker, Mr. Lee is stepping aside, having turned 65 years old. His successor: Jill M. Considine, chief executive of American Express Bank Ltd. and formerly the top bank regulator in New York State.

In addition to helping establish the Chips network, Mr. Lee will be remembered for instituting strict hmits on the amounts that banks can owe ach other while using the system. The need for such controls was etched in his mind in 1974 when Chips nearly collapsed after the failure of Germany's Bankhaus Herstatt.

U.S. financial institutions were exposed to millions of dollars in losses when German regulators shuttered Bankhaus Herstatt at midday that June 26. The Cologne-based bank had specialized in foreign currency trading, and it was unable to settle many of its transactions that day. Banks refused to initiate new transactions until the Herstatt transactions were settled, grinding the four-year-old Chips network to a halt.

Helped Draft Emergency Rules

Mr. Lee, then the association's executive vice president, helped devise a solution that saved Chips - the Clearing House Interbank Payments System - from collapse.

With the participating banks, Mr. Lee helped draw up emergency rules. Banks were required to make payments at the time customers ordered them, but were allowed to withdraw them the following morning if no covering payments had come in.

"Every morning we sat in a conference room, and called a roll. Any bank that wanted to withdraw a payment could do so," says Mr. Lee.

For six months, Chips settled at least a day late. But eventually confidence was restored.

The crisis convinced Mr. Lee that additional risk-reduction measures had to be taken. He led the drive that has made the privately run Chips a model of risk management for both the private and the public sector.

"John has been a big force for change in the banking industry," says Elliott McEntee, president of the National Automated Clearing House Association. "As a result of his efforts, banking industry customers are exposed to less risk today."

Forum for the Powerful

The New York Clearing House was established in 1853 to simplify the exchange and settlement process among New York banks, with the quasi-governmental effect of helping stabilize the monetary system.

The association is also a forum where some of the nation's most powerful bankers meet to discuss policy and issues.

For example, when New York. City as close to bankruptcy, Gov. Hugh Carey and Mayor Abraham Beame met with bankers and Mr Rohatyn in the conference room adjoining Mr. Lee's office to craft the rescue deal for the city.

Mr. Lee, who was born and raised outside of Provo, Utah, and earned a law degree from Georgetown University, got his start as an attorney in charge of the Salt Lake City branch of the Securities and Exchange Commission, then had a private law practice in Salt Lake City.

|Very Formidable'

He came to the clearing house in 1967, after a stint as general counsel for the Federal Deposit Insurance Corp.

"When I first sat down with the clearing house committee, I thought these were the oldest, most profound men I'd ever seen in my life," Mr. Lee says. "They were very formidable."

The bank executives - men like George S. Moore of First National City Bank (now Citicorp), William H. Moore of Bankers Trust New York Corp., and Thomas S. Gates of J.P. Morgan's unit Morgan Guaranty Trust Co. - wanted Mr. Lee to devise a payments mechanism that would enable them to transfer money electronically from one bank to another.

|Getting Bogged Down'

At the time, interbank payments were handled like cashier's checks, in paper form. There were neither enough clerks to issue the checks nor enough messengers to transport them. "We were getting bogged down," Mr. Lee says.

At that time, there was no system for making interbank payments. Fed Wire, then a teletype system, operated primarily on behalf of the Federal Reserve banks, allowing them to transfer funds among themselves, although a handful of commercial banks also used the system.

Funds transfers clattered over the teletype, and transactions were printed out on paper. The system could not handle the volume of transfers the money-center banks had in mind.

Mr. Lee returned to the bankers and said a computerized system would have to be built from the ground up. The system took three years to design, and in 1970 it was up and running.

Mr. Lee also has overseen the development of New York's automated clearing house system, established in 1975. In 1990, it became the first in the nation to go all-electronic.

"John Lee has made a major contribution to the banking industry in New York," said Gerald Corrigan, the outgoing president of the New York Fed.

As he steps down from the clearing house, Mr. Lee says his most fervent hope is that Chips continues its independence from the Fed.

Real-Time Movement a Concern

"The central banks [in industrialized nations] are coalescing around the subject of the payments systems," he says, adding that he was concerned Western countries will move to "realtime" settlement systems, instantly debiting and crediting accounts.

Private systems, Mr. Lee explains, don't have the capacity to take the risk for a real-time settlement system.

Mr. Lee, 65, says he plans to spend more time in his house in Hawaii as vacation in the Southwest. Mr. Lee is an avid skier, and he and his wife also own a house in Salt Lake City.

But Mr. Lee says he also intends to keep on working, as a consultant. He may spend part of the summer in Czechoslovakia, helping bankers design an interbank payments system.

"I have no regrets about leaving," Mr. Lee says. "But it's been an incredible experience."

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