WASHINGTON - In office less than nine months, Federal Deposit Insurance Corp. Chairman Don Powell has racked up an impressive won-lost record against some powerful adversaries, including his rival regulators, industry trade groups, and members of Congress.
The former Texas community banker has been unafraid to court controversy in his quest to restore the FDIC's reputation as a player, a role ceded to the Federal Reserve Board a decade ago when the agency lost its last heavy hitter, L. William Seidman.
For instance, Mr. Powell, in the face of long odds, has relentlessly pushed for expanded deposit insurance coverage despite intense opposition from Fed Chairman Alan Greenspan - not to mention his benefactors in the Bush administration.
Mr. Powell has also broadened the FDIC's empire beyond small state banks, gaining the authority to examine most any bank; defeated the American Bankers Association's attempt to gut deposit insurance reform legislation; and stood up to lawmakers opposed to his agency's restructuring.
And if last week is any indication, Mr. Powell is just getting warmed up.
Describing the current system of four federal agencies for banks and thrifts as inefficient and outdated, Mr. Powell kicked off an effort Friday to tackle a radical regulatory restructuring - one of banking's most hotly debated topics.
"Unlike the banking industry, we have the luxury in Washington of extensive discussion and inaction, because we do not have the marketplace to discipline us," he said during a speech in Chicago. "The longer inefficiencies persist in our regulatory structure, the more we risk losing the trust of the public and the respect of the industry we regulate."
Mr. Powell said the FDIC will hold a conference this fall on the subject, bringing together the industry, academics, and regulators to look into ways to make the system more efficient - ideas that could include the mergers of some agencies, or at least some of their functions. In an interview Monday, Mr. Powell acknowledged that one of the reasons he brought up the matter was to ensure that the FDIC has an important role in shaping the future of the system. (Treasury officials have been talking since last year about ways to streamline bank supervision.)
"If we are going to talk about this, we along with others need to be at the table when it is discussed," Mr. Powell said.
Many observers said it was bold of him to raise broach such a tortuous issue.
"Today, most Washington insiders would run from this debate," said Mark Jacobsen, a partner with Promontory Financial Group and former chief of staff at the FDIC. "But an outsider, like Mr. Powell, can look at it with fresh eyes. Maybe he will be able to see a way to accommodate the tangle of different interests."
But this is hardly Mr. Powell's only foray into risky territory.
He is also refusing to bow to pressure from several lawmakers, including the entire Massachusetts congressional delegation, to revamp his FDIC restructuring plan. As part of a series of changes at the agency, Mr. Powell plans to eliminate two of the eight regional offices, in Boston and Memphis, and transfer most responsibilities to other districts.
New England bankers and lawmakers have vigorously protested the move, saying that their region is unique and that such a switch would reduce the level of attention to the area. An April 26 letter from several lawmakers, including nine senators and 22 members of Congress, was signed by, among others, Sens. Edward M. Kennedy and Christopher J. Dodd and Reps. Barney Frank and Edward J. Markey.
Though he says he respects the input from bankers and lawmakers, Mr. Powell called the move a "business" decision intended to save the industry money and make the agency more efficient. The FDIC also contends that the decision should not have a direct impact on banks in the area, as the former regional office in Boston will be maintained as a field office and staffed with the same examiners.
Mr. Powell has also ruffled Senate Banking Committee Chairman Paul Sarbanes, who reportedly was unhappy with the FDIC chief's move to fold the division of consumer and compliance affairs into the division of supervision. The FDIC tinkered with the plan's details to meet some of the Maryland Democrat's concerns, but the merger will go into effect next month.
Since taking office last August, Mr. Powell has won key battles against the industry and fellow regulators.
In January the FDIC successfully reached an agreement with the Fed, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision to examine any troubled institution without the primary federal supervisor's permission. The deal also gives FDIC access to all exam information on the country's eight largest banking organizations - something the agency had long coveted.
In the debate over deposit insurance reform, Mr. Powell, with the help of key Democrats, persuaded lawmakers to kill an amendment that would have artificially inflated the size of the insurance fund and to force the agency to depart from generally accepted accounting principles.
It seems a good bet that Mr. Powell will continue to stir things up. And at least one former regulator said he understood why.
"If you are not controversial in Washington, it means that you are not doing much," said William Isaac, the chairman of the Secura Group, in Falls Church, Va., and an FDIC chairman in the 1980s. "He is not there for his health, or the money it pays, or the glory of it - I think he came to town because he thought he could accomplish something."
