The Clinton administration has narrowed its search for a Federal Deposit Insurance Corp. chairman to three candidates, according to sources close to the process.

Lawrence Connell, president of Atlantic Bank in Portland, Maine, and Jonathan L. Fiechter, former Office of Thrift Supervision acting director, are said to be the front-runners. The name of the third finalist could not be determined.

A Treasury Department spokesman declined to comment. But sources said Treasury and White House officials are drafting a memo for President Clinton recommending the three candidates.

Mr. Connell is thought to be the favorite of Treasury brass because of his experience as a federal regulator and his close association with John D. Hawke Jr., Treasury's under secretary for domestic finance. Both worked together for nine years on the Shadow Financial Regulatory Committee.

Associates said that Mr. Connell, formerly National Credit Union Administration chairman and Connecticut bank commissioner, wants the job.

The sale of his bank, which is scheduled to close in October, will make him available.

"He has an interest in getting back to Washington," said George G. Kaufman, co-chairman of the shadow committee. "This is a good time for him to get back into government."

Mr. Connell, who is white, may be hurt by the Clinton administration's desire to nominate more women and minorities to top government jobs. The President's nominee will succeed Ricki Helfer, the first woman to head a federal banking agency.

Mr. Connell declined to comment.

Mr. Fiechter, who now works for the World Bank, has the experience now needed at the FDIC. In his four years running the OTS, Mr. Fiechter successfully shrank the agency. The FDIC is going through a similar downsizing.

In addition, as OTS director, Mr. Fiechter had a seat on the FDIC board and was well-liked by agency staffers and the other regulators.

Previously mentioned candidates are Texas Banking Commissioner Catherine A. Ghiglieri, FDIC staffer Leslie A. Woolley, Delaware Bank Commissioner Timothy R. McTaggart, and former Hawaii financial regulator Donna A. Tanoue.

Observers said Ms. Ghiglieri, who spent 18 years with the Office of the Comptroller of the Currency, had been an early favorite and has lobbied hard for the job. She declined to comment.

"A few weeks ago it looked like she was off and running," said Neil Milner, president of the Conference of State Bank Supervisors.

Some expect the White House to select a nominee by September, but skeptics noted that nominations have been moving slowly in Washington this year. Mr. Milner said he had been told to expect an announcement "shortly"- a month ago.

Meanwhile, acting FDIC Chairman Andrew C. Hove Jr. underwent treatment for prostate cancer on Wednesday, an agency spokesman said. Mr. Hove, 62, expects to be back to work in two weeks.

"Full results won't be known for some time," the spokesman said. "Early indications are it has gone well."

FDIC Director Joseph H. Neely has assumed the chairman's duties until Mr. Hove returns.

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