Currency's recently unveiled Project Canary is up before the birds most mornings.

Vernon H. Stafford Jr., a 20-year veteran of the Comptroller's Office, leaves his Maryland home before 4:30 a.m. every day to beat the traffic into the city and get in a workout at the agency's gym before sitting down at his desk around 6 o'clock.

Mr. Stafford, a career bank examiner, says the early hours let him spend time with his wife and two young children in the evenings, but his schedule also reveals the discipline that helped the native New Yorker rise through the OCC hierarchy. After starting in 1979 as a financial intern working between terms at Roger Williams College, Mr. Stafford is expected soon to be named the agency's deputy comptroller for core policy.

"He's obviously a very bright guy and is very keenly attuned to the financial marketplace today and how his agency can adapt to the changes taking place in it," says Scott Albinson, a managing director at the Office of Thrift Supervision. "He's definitely an up-and-coming star in his organization."

Mr. Stafford, 41, has been given responsibility for carrying out Project Canary, the OCC's push to upgrade the predictive tools examiners use to forecast the health of national banks.

Project Canary takes its name from the birds that coal miners used to carry underground with them. The birds would succumb to poisonous gases long before miners could smell them, providing advance warning of impending disaster.

Mr. Stafford, who has a computer-generated picture of a canary taped to the wall outside his office, hopes the program will give similar warnings to banks headed for trouble.

Having spent much of his career in the field as an examiner, Mr. Stafford approaches the development of these tools both as a trained accountant and a veteran of countless bank examinations. After graduating from Stonier Graduate School of Banking, he spent 1991 and 1992 in charge of the special supervision department for regional banks in the Northeast -- a time when most of them were considered "problem" institutions.

He is concerned that the current state of the economy and the banking industry might lead bankers to make the same kind of mistakes they made a decade ago. "As competition heats up, banks may not always make the most prudent loans," he says.

"Having lived through the problems of the late '80s and early '90s, I remember how difficult it was to convince bankers that if they were not prudent they could face detrimental results," he says.

Mr. Stafford says the OCC's role is a cross between police officer and physician, with responsibility for both the safety and the soundness of the banks it regulates. Project Canary, he says, is designed to upgrade diagnostic capabilities for the agency's "physician" role.

By giving examiners new, more reliable modeling techniques, Mr. Stafford hopes to augment their persuasive power when confronting banks with potential problems. "Our goal is to make these tools universally available to our examiners in the field so that we are all on the same page and can respond as a supervisor before the problems occur."

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