WASHINGTON - Federal Deposit Insurance Corp. Chairman-designate Donald E. Powell offered his first policy comments Tuesday, promising to carry through the agency's reform effort but signaling that he does not share all of his predecessor's views on political strategy or other issues, such as predatory lending.
At his confirmation hearing before the Senate Banking Committee, the Texas community banker mollified some in the industry who were concerned that he might not proceed with the reform effort.
"This will not be put on the shelf," Mr. Powell told reporters after the hearing, though in testimony he declined to elaborate on his views of specific recommendations made by the agency in April.
He disagreed with outgoing FDIC Chairman Donna Tanoue's testimony at an oversight hearing last week that the recommendations must be adopted as a whole and should not be dealt with separately. She had said, for example, that increasing the $100,000 coverage level per account without instituting better risk-based premiums would distort the system even further.
"I don't think it is important that they be all linked together," Mr. Powell said in response to questions from Senate Banking Committee Chairman Paul Sarbanes. "I'm not sure that it is critical that we make all the recommendations together at one time. Again, I would want to hear the view from those that had input into it, but perhaps there are more important recommendations, and you could rank those recommendations."
Diane Casey, president of America's Community Bankers, said she agreed with Mr. Powell on the need to prioritize certain elements of the deposit insurance reform recommendations.
"The FDIC would serve its purpose better if it actually ranked the recommendations and allowed Congress to address the more important points first, with some public-policy debate to happen on the more controversial issues," Ms. Casey said.
Mr. Powell said he would consult with FDIC staff before taking any more significant positions on reform. "I'm not sure it would be prudent to draw any conclusions at this time without making sure I've heard all the voices," Mr. Powell said.
Bankers were also interested that Mr. Powell, who is chairman of the First National Bank of Amarillo, strongly indicated that he did not support more legislation to fight predatory lending. That issue is of particular concern to Sen. Sarbanes, who has said he wants to take action on it.
"From my perspective as a professional banker, I can say that the application and enforcement of normal bank underwriting guidelines can go a long way toward eliminating this practice," Mr. Powell said. "I look forward to working with the FDIC staff and other agencies to determine how we might effectively bring an end to this abusive practice."
The industry has long argued that better enforcement would solve the problem, and that more legislation is not needed.
"We would agree with" Mr. Powell's statement "completely," said Edward L. Yingling, chief lobbyist for the American Bankers Association. "We think education and enforcement can really address this issue."
Mr. Powell, who appeared relaxed and confident, added that he was ready for the upcoming regulatory review of Community Reinvestment Act requirements and investigating the effects of financial reform legislation passed in 1999.
"I am anxious to be part of this process and to learn more from all interested parties, including bankers and community groups, whether any changes are needed to make the CRA more effective," Mr. Powell said. "I also look forward to exploring with the staff of the FDIC and the other agencies how the changes to the CRA by Gramm-Leach-Bliley have affected insured financial institutions and the communities they serve."
But Mr. Powell said he was aware that the agency was heading into uncharted territory in a transformed industry.
"Globalization of financial services, innovative technologies, and legislatively expanded powers and authorities have changed banking dramatically and forever," Mr. Powell said. "These changes will continue, and they require us to deal with issues our predecessors could not have dreamed of."
Mr. Powell's confirmation seems virtually assured, and no senators have expressed reservations. But the final vote may still be delayed, because the full chamber has yet to adopt an operating resolution after the recent Democratic takeover.
Without that resolution, the committee cannot vote on any nominations, the banking panel's spokesman said. Negotiations between Republicans and Democrats continue.
To be sworn in, Mr. Powell will have to sell his ownership stake in First National Bank. He testified Tuesday that he has less than a 5% controlling interest. That was a surprise to industry observers, because it was widely believed that Mr. Powell was the majority stockholder, and that the bank was up for sale.
