WASHINGTON -- The banking industry's biggest bear isn't some Wall Street guru. It's William Taylor, chairman of the Federal Deposit Insurance Corp., and critics say it is about time that he lightened up.

Industry earnings are at all-time highs, problem loans are leveling off, and bank stocks are soaring. Yet Mr. Taylor, halfway through a 17-month term, continues to run his regulatory ship like a captain bracing for a hurricane.

Standing Pat on Premium Hike

Last month he insisted that insurance premiums must be hiked 22% to cover future bank failures, an action decried and second-guessed by bankers. He continues to forecast more bank failures than private-sector experts.

And he told a Senate panel last Wednesday that he has no immediate plans to alter those projections because he worries what would happen to industry earnings should interest rates begin to rise.

Mr. Taylor expects 200 banks with $86 billion in assets to fail this year, plus an unspecified number of banks holding $82 billion in assets to close in 1993. So far this year, 57 banks with $16.7 billion in assets have failed.

Mr. Taylor's worrying is worrying bankers and their friends. They fear the FDIC chief might scare investors at the time banks need them the most. If that happens, Mr. Taylor's worse dreams would come true, because banks would lack the capital required to weather unexpected calamities.

"The number of failures is nowhere near hitting the average they are talking about," said L. William Seidman, Mr. Taylor's predecessor at the FDIC. "The banking industry and the S&L industry are doing well at the moment. What the FDIC ought to be seeing is slow, but clear, improvement," he said.

Lud Ashley, the outspoken president of the Association of Bank Holding Companies, also believes that Mr. Taylor is too chary.

"In the short term this may be smart politically; in the long run it is very dangeours," he said.

'I'm Not Too Cautious'

Mr. Taylor professes to understand his critics. But he refuses to lower the agency's high state of alert.

"I'm not too cautious," Mr. Taylor insisted in an interview. "Things here have been very bad and the system has been in deep trouble. When you have $600 billion of [assets] on the problem list, it is pretty hard not to take that seriously."

He added that recent history has been unkind to optimists.

"If things get better, we're prepared to say so," Mr. Taylor said. "But all of us have tried to project what is going to happen, and it's always gotten worse."

Insights Acknowledged

While they wish he were less of a pessimist, most people think Mr. Taylor, should be reappointed when his term ends Feb. 28, 1993.

He is uniformly praised for his knowledge of the industry, the fruit of 20 years spent in bank supervision at the Federal Reserve.

"I think he is one of the best FDIC chairmen, in terms of capabilities, I've evern seen," said Jerry Hawke, a partner with the Arnold & Porter law firm in Washington.

Mr. Taylor, who turns 53 in two weeks, is a former college wrestler who doesn't mince words.

"There's no fluff with Taylor," says John Douglas, a former FDIC general counsel. "He tells you what he's doing and he goes and does it."

While Mr. Taylor is regarded as superior on substance, many people think he lacks the political skills that made Mr. Seidman so effective.

Specifically, Mr. Ashley complained that Mr. Taylor is not fighting the General Accounting Office, which is requiring the FDIC to sock away $16 billion as a reserve against future losses.

"Taylor has just bought the GAO line hook, line, and sinker," Mr. Ashley says. "Seidman told them to stick it."

Bert Ely, a consultant who is working for Mr. Ashley, adds: "They are reserving far into the future to justify the [premium] rate increase."

Alert to Future Losses

Mr. Taylor admits that reserving in 1991 was "a little more aggressive" than in 1990, when $12 billion was set aside. "We want to make sure we got it all," he explains.

"It" is future losses. Mr. Taylor wanted the average premium to rise seven cents, to 30 cents per $100 of deposits, but was forced to settle for 28 cents when the rest of his board flinched.

Joe Belew, president of the Consumer Bankers Association, says he thinks Mr. Taylor was "wed" to a premium increase from his first day on the job. While the FDIC chief listened to the industry's complaints, he never really heard them, Mr. Belew says.

"My sense is he just wanted to bite the bullet get it over with," says Mr. Belew.

Once the FDIC can cover its losses, the public will believe that a bailout of the Bank Insurance Fund is not needed, he explains.

Mr. Taylor says the banking industry ought to wake up and value that goal too because "the best way to keep the government out of the banking business is to keep the banking business out of the public's pocket."

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