Before the credit storm hit, the waters were calm for Gary Holloway. "I was doing a lot golfing and boating on Lake Travis [near Austin]," says Holloway, who took an early buyout and retired from the FDIC in 2005. "But in March, the FDIC called and said 'We need some people. How about coming back?' It was an opportunity. I always enjoyed the FDIC, so it was a win-win."

But not necessarily a win-win-win.

Holloway, who was a workout specialist for the FDIC during the S&L crisis in the 1980s, came back to become the FDIC's closing manager out of the Dallas office of Division of Resolution and Receivership. It's a job title that's self-descriptive. Holloway, who retired during an almost two-year span in 2005 and 2006 in which no banks failed, is one of about 80 people-mostly retirees-that the FDIC has added to its total workforce of about 4,600 to help the agency provide insurance for depositors, collect premiums and do other work involved with the workouts of banks that have imploded as a result of risky lending practices. As more banks fail, the agency may recruit more specialists like Holloway-plans call for as many as 300 new workers specializing in workouts.

Since coming back, he's been part of the team that worked on the cleanup of ANB Financial, a $2.1 billion-asset bank in Bentonville, AR, that was seized by the FDIC a couple of months ago because of exposure to bad construction loans. Holloway, who commutes home to Austin every two weeks and is earning a full salary in addition to his pension, next went to Las Vegas, where the First National Bank of Nevada failed on July 25. Due to the increasing pace of bank closings, the FDIC has already elevated Holloway's duties to oversight of loan sales, loan purchases, reviewing compromised cases and dealing with issues surrounding construction and development. "The work is basically the same as it was during the S&L crisis," Holloway says. "Loans are loans."

Financial pundits have been reluctant to predict whether the current downturn will be worse than the infamous S&L crisis. Holloway says one difference is the size of the failures. "The [Nevada] Vegas bank was $2.5 billion and ANB was $2 billion. And Indy Mac was $32 billion. Those are large numbers," he says. "If this continues you can certainly call what's going on a crisis."

As if banks don't have enough problems, it turns out that many are still grappling unsuccessfully with Web security.

Despite a decade of spending hundreds of millions of dollars on security solutions, a University of Michigan study says most banks still have very basic design flaws that easily put customers at risk of ID theft and other fraud.

These flaws are derived from the flow and layout of bank websites, and include placing log-in boxes and contact information on insecure web pages as well as failing to keep users on the site they initially visited. Other basic and widespread flaws include putting contact and security advice on insecure pages, a flaw found in 55 percent of banks studied.

Atul Prakash, a professor in the Department of Electrical Engineering and Computer Science, says there's still lots of room for improvement-adding that design flaws are widespread and include some of the largest banks in the country. The professor also suggests that while the focus of his department is to get users to be careful when using bank websites, the flaws make it hard for customers to make the proper security decision. (c) 2008 U.S. Banker and SourceMedia, Inc. All Rights Reserved.

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