Taylor Finds Easy Sailing At Hearing On FDIC Job
WASHINGTON -- Federal regulator William Taylor coasted through a Senate hearing Tuesday, virtually assuring his confirmation as chairman of the Federal Deposit Insurance Corp.
Mr. Taylor, the Federal Reserve's director of bank supervision, had been expected to face critical questions about the Fed's failure to uncover until early this year BCCI's secret takeover nearly a decade ago of a District of Columbia bank holding company.
But Chairman Donald W. Riegle was the only member of the Senate Banking Committee to grill Mr. Taylor on the topic, and the Michigan Democrat seemed satisfied with the answers.
No Evidence of Control
Mr. Taylor testified that, while Bank of Credit and Commerce International owned First American Bankshares secretly for a number of years, the Fed has found no evidence it controlled the American company. He added, however, that bank regulators should beef up their investigatory capabilities.
After the 3 1/2-hour hearing, Sen. Riegle told reporters that Mr. Taylor's record in the BCCI scandal would not be a roadblock to confirmation.
The 51-year-old career regulator still must respond to written questions, but no other hearing is planned. The committee is expected to vote on the nomination within a couple of weeks; the Senate, shortly afterward.
The nomination could be proved by Oct. 16, when L. William Seidman's six-year term as FDIC chief ends.
Mr. Taylor told the panel that the FDIC must find more innovative ways to deal with troubled banks.
Too Many Banks Closed?
"We can't just continue to close and close and close and liquidate and liquidate and have the assets pile up," he said. "It is obvious we have to look at new ways to do business."
Mr. Taylor said a failed bank's assets should stay in the banking system - not come under government control.
Bank regulators must judge which banks should be worked with and which should be shut down, he said. While he did not say so specifically, Mr. Taylor implied that regulators have closed too many banks in recent years.
But Mr. Taylor praised the deal the FDIC cut to sell Miami-based Southeast Banking Corp. He noted that the buyer, First Union Corp., Charlotte, N.C., took all of Southeast's assets and agreed to share in the losses produced by those assets.
Much of the questioning focused on the credit crunch. Many senators, led by Sen. Alphonse D'Amato, R-N.Y., complained that regulators are impeding an economic recovery by scaring bankers away from lending.
Mr. Taylor agreed that credit is tight and said some overzealous examiners could be responsible for part of the problem. But he blamed the bulk of the credit crunch on bankers' becoming more conservative lenders as the economy slows.
He supports getting out and talking to bankers about the importance of making good loans, Mr. Taylor said. He also endorsed setting up some sort of forum that gives recourse to bankers who feel their examiners have been too harsh.
As for running the Resolution Trust Corp. in addition to the FDIC, as Mr. Seidman has done the last two years, Mr. Taylor supported plans to separate the two agencies.
The next FDIC chief's term will last only about 16 months. The thrift bailout law called for the shorter term to permit the winner of the 1992 presidential election to pick his own FDIC chairman.