SAN FRANCISCO — Her company — Charles Schwab Corp. — was the first to take advantage of new federal regulations allowing brokerages to merge with banks.

Now Linnet F. Deily, a vice chairman at San Francisco-based Schwab, has herself become a symbol of convergence as the first nonbank executive to become a member of the Federal Advisory Council, the 12-member roundtable of senior executives who quarterly bend the ear of the Federal Reserve Board of Governors.

Until Ms. Deily’s appointment Wednesday, banks had supplied all appointees to the council.

In her new role as the 12th district’s representative, which is effective Jan. 1, Ms. Deily, 55, succeeds Walter A. Dods Jr., the chairman and chief executive of Honolulu-based BancWest Corp., who had represented the largest of the Federal Reserve districts for the past two years.

Ms. Deily’s appointment is particularly interesting both in tracing her own career path — she was a banker for 23 years — and in outlining what constitutes a financial institution engaged in banking as codified by the Gramm-Leach-Bliley Act of 1999. That monumental piece of legislation broadened the field beyond banks and thrifts, and recast the financial holding company as a broad financial services company that can engage in banking, brokerage, and insurance.

“This is a signal that the Federal Reserve is embracing this newly expanded financial entity known as the financial holding company,” said Elizabeth Masten, vice president and corporate secretary for the Federal Reserve Bank of San Francisco.

When the Federal Reserve was seeking a candidate to succeed Mr. Dods, it was important to consider individuals from institutions other than banks, Ms. Masten said. “We look for the best-qualified individuals to represent financial services in our district, and with Gramm-Leach-Bliley, our pool of candidates has certainly expanded,” she said.

The council is not considered to exert great impact on regulatory policy. But input from its members is one way the Federal Reserve assesses regional banking conditions and gauges banking-related issues like predatory lending or the Community Reinvestment Act.

This dialogue takes place at meetings four times a year in Washington, when members present information on topics suggested by the governors and researched by the bankers using their own information and other institutions in the district.

Appointing a representative who does not work for a bank “won’t be unusual in the future, but there had to be a first,” said James Annable, director of economics at Bank One Corp. and a longtime secretary for the council. “The council has recognized for years that the financial landscape has changed and that these divisions don’t make sense,” he said.

In an interview last week, Ms. Deily acknowledged the changes that have occurred in financial services in recent years. In the four years since she left banking, where she was chairman of First Interstate Bank of Texas, Ms. Deily said she has seen convergence take hold in financial services.

The brokerage industry was much more about transactions and banking — much more of a relationship” she said.

“I think we have moved toward relationship,” she said. And Schwab, which acquired private banking company U.S. Trust, has certainly moved from beyond its transactional roots.

It is connection with that acquisition, Schwab was the first nonbank to apply to the Federal Reserve to become a financial holding company subject to oversight by the Federal Reserve Board.

Ms. Deily’s star has risen since she joined Schwab in 1996 as enterprise president for the San Francisco brokerage giant’s institutional services and became a vice chairman in July 1999, becoming one of the highest-ranking women executives at U.S. financial services companies.

As president of Schwab’s retail business, Ms. Deily was directly involved the company’s acquisition of U.S. Trust Corp. In October, she became a member of the newly-created office of the president, overseeing the company’s strategic direction and integration of acquisitions, including U.S. Trust.

Other new appointees of the Federal Advisory Council for next year’s term include chairman and chief executive officer of Harris Bank, Alan G. McNally, who is replacing Norman R. Bobins, chairman, chief executive and president of LaSalle National Corp. and currently council vice president, as the seventh district’s representative.

The council’s membership for 2001 will also include some very familiar faces. Breaking with the tradition of appointees leaving after their third term, J.P. Morgan chairman Douglas A. Warner III, who has presided as president of the council over the last year, has been asked by the Federal Reserve Bank of New York to stay on for a fourth term.

On Wednesday Ms. Deily was not available for comment.

The San Francisco Fed’s decision to go beyond the roster banks in its district may also have been one of practicality: the number of large regional institutions based in the West has shrunk substantially over the last decade.

Schwab Exec Appointed To Fed Advisory Council

By Laura Mandaro

SAN FRANCISCO — Her company — Charles Schwab Corp. — was the first to take advantage of new federal regulations allowing brokerages to merge with banks.

Now Linnet F. Deily, a vice chairman at San Francisco-based Schwab, has herself become a symbol of convergence as the first nonbank executive to become a member of the Federal Advisory Council, the 12-member roundtable of senior executives who quarterly bend the ear of the Federal Reserve Board of Governors.

Until Ms. Deily’s appointment Wednesday, banks had supplied all appointees to the council.

In her new role as the 12th district’s representative, which is effective Jan. 1, Ms. Deily, 55, succeeds Walter A. Dods Jr., the chairman and chief executive of Honolulu-based BancWest Corp., who had represented the largest of the Federal Reserve districts for the past two years.

Ms. Deily’s appointment is particularly interesting both in tracing her own career path — she was a banker for 23 years — and in outlining what constitutes a financial institution engaged in banking as codified by the Gramm-Leach-Bliley Act of 1999. That monumental piece of legislation broadened the field beyond banks and thrifts, and recast the financial holding company as a broad financial services company that can engage in banking, brokerage, and insurance.

“This is a signal that the Federal Reserve is embracing this newly expanded financial entity known as the financial holding company,” said Elizabeth Masten, vice president and corporate secretary for the Federal Reserve Bank of San Francisco.

When the Federal Reserve was seeking a candidate to succeed Mr. Dods, it was important to consider individuals from institutions other than banks, Ms. Masten said. “We look for the best-qualified individuals to represent financial services in our district, and with Gramm-Leach-Bliley, our pool of candidates has certainly expanded,” she said.

The council is not considered to exert great impact on regulatory policy. But input from its members is one way the Federal Reserve assesses regional banking conditions and gauges banking-related issues like predatory lending or the Community Reinvestment Act.

This dialogue takes place at meetings four times a year in Washington, when members present information on topics suggested by the governors and researched by the bankers using their own information and other institutions in the district.

Appointing a representative who does not work for a bank “won’t be unusual in the future, but there had to be a first,” said James Annable, director of economics at Bank One Corp. and a longtime secretary for the council. “The council has recognized for years that the financial landscape has changed and that these divisions don’t make sense,” he said.

In an interview last week, Ms. Deily acknowledged the changes that have occurred in financial services in recent years. In the four years since she left banking, where she was chairman of First Interstate Bank of Texas, Ms. Deily said she has seen convergence take hold in financial services.

The brokerage industry was much more about transactions and banking — much more of a relationship” she said.

“I think we have moved toward relationship,” she said. And Schwab, which acquired private banking company U.S. Trust, has certainly moved from beyond its transactional roots.

It is connection with that acquisition, Schwab was the first nonbank to apply to the Federal Reserve to become a financial holding company subject to oversight by the Federal Reserve Board.

Ms. Deily’s star has risen since she joined Schwab in 1996 as enterprise president for the San Francisco brokerage giant’s institutional services and became a vice chairman in July 1999, becoming one of the highest-ranking women executives at U.S. financial services companies.

As president of Schwab’s retail business, Ms. Deily was directly involved the company’s acquisition of U.S. Trust Corp. In October, she became a member of the newly-created office of the president, overseeing the company’s strategic direction and integration of acquisitions, including U.S. Trust.

Other new appointees of the Federal Advisory Council for next year’s term include chairman and chief executive officer of Harris Bank, Alan G. McNally, who is replacing Norman R. Bobins, chairman, chief executive and president of LaSalle National Corp. and currently council vice president, as the seventh district’s representative.

The council’s membership for 2001 will also include some very familiar faces. Breaking with the tradition of appointees leaving after their third term, J.P. Morgan chairman Douglas A. Warner III, who has presided as president of the council over the last year, has been asked by the Federal Reserve Bank of New York to stay on for a fourth term.

On Wednesday Ms. Deily was not available for comment.

The San Francisco Fed’s decision to go beyond the roster banks in its district may also have been one of practicality: the number of large regional institutions based in the West has shrunk substantially over the last decade.

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