Like a vaudeville performer who must say good-bye to a longtime partner, John Downey says he will miss Jonathan Fiechter when the latter leaves the Office of Thrift Supervision next month.

The two men have worked together more than 15 years, starting with their days at the Office of the Comptroller of the Currency. They both switched to the thrift agency in the late 1980s when crisis hit the industry, and Mr. Fiechter became its acting director.

The 59-year-old Mr. Downey - with his round, ruddy face; question-mark eyebrows; and Boston accent - has been Mr. Fiechter's No. 2 at OTS for the last six years.

Mr. Downey wasn't surprised June 21 when Mr. Fiechter announced he was leaving. "We're pretty close professional friends, and he had confided in me about struggling with the decision to leave or stay on.

"I thought I'd talked him out of it," Mr. Downey said. "But one morning, he came into my office, and he had that look on him. I just knew he was going to tell me what I didn't want to hear."

While the Treasury Department has not yet selected a replacement for Mr. Fiechter, it's clear that the agency's 1,400 employees will look to Mr. Downey for direction come Sept. 4, when Mr. Fiechter starts his new job as director of financial sector development at the World Bank.

In a recent interview, Mr. Downey said the agency's morale is good, but he acknowledged: "Uncertainty continues to overhang us and the industry."

For years, policymakers have pushed to have the OTS folded into the Comptroller's Office. Congress currently is considering a merger of the thrift and bank charters, which would pave the way for the agency consolidation.

In the meantime, the business of thrift regulation continues, and Mr. Fiechter's exit leaves a huge vacuum for Mr. Downey to fill.

The biggest piece of unfinished business is rescuing the Savings Association Insurance Fund. As thrifts find ways to avoid its high premiums and shift deposits to the Bank Insurance Fund, regulators worry that the thrift fund won't able to pay interest on the Financing Corp. bonds issued in the late 1980s to help pay for the savings and loan bailout.

Ask Mr. Downey about the fund, and he'll talk knowledgeably about reserve levels and deposit migration. But he really gets going when you mention regulatory relief.

Mr. Downey is overseeing an effort to revamp 70% of the agency's rules. The idea, he said, is to give thrifts more flexibility by replacing detailed regulations with simpler, less binding guidelines.

For example, the OTS is revising its policy statement on conflicts of interest. The revision would replace a list of prohibitions with an admonition that directors or officers not advance their own interests to the detriment of their institutions.

The industry appreciates Mr. Downey's approach. "He's very professional, easygoing, and smart," said Paul Schosberg, president of America's Community Bankers. "He has a well-deserved reputation for being accessible and a good listener."

Perhaps his down-to-earth style comes from his background. Until he was 28, Mr. Downey worked with food, not money. He first was a meat cutter, then a supervisor in two food chains.

As a married father of four children, he was looking for something better. "I wanted to become a banker. It seemed like an easier life," Mr. Downey recalled.

Night classes at Boston College earned Mr. Downey a degree in economics. Told he was too old for bank management training programs, he sought a job as an examiner to get some exposure to banking.

He applied to the Comptroller's Office, was hired on the spot, and never looked back. "I got so involved with the regulatory process I could never get myself to leave," Mr. Downey said. "I loved to examine banks."

In the 1970s, he assisted in a massive study of OCC operations and wrote new policies, procedures, and handbooks for the agency.

And when farmers and agricultural lenders said that OCC examiners were being too heavy-handed, the agency sent Mr. Downey and Mr. Fiechter to rural towns nationwide to smooth things over.

"A guy with my accent might have made them uneasy," Mr. Downey joked. "But Jonathan had that calming effect."

Mr. Downey ultimately rose to chief national bank examiner. But in 1986, after 19 years at the OCC, he accepted a lucrative offer to become executive vice president of the Federal Home Loan Bank of Indianapolis. "It was a lovely job, but the challenges were not as great," he recalled.

By 1989, the thrift industry's problems were of crisis proportions, and the Office of Thrift Supervision was created. Mr. Downey became the new agency's district director in Indianapolis. The following year, he took on the thankless job of cutting the 12 district offices inherited from the Federal Home Loan Bank System to five. The agency payroll was cut by more than 1,600.

Now, with thrift earnings strong and steady, the OTS has stabilized, and no further downsizing is planned, Mr. Downey said. Though uncertain how long a run the agency will have, he is confident the show will go on for the people who now work at OTS.

"I'm going to try and get the staff placed" in whatever agency absorbs the OTS, he said, "so that they can continue to be the supervisors and regulators of the financial system in this country."

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