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T HE QUIBBLES of John Sununu did not prevail, and for that President Bush deserves congratulations. He has just reappointed a no-nonsense regulator to be U.S. comptroller of the currency despite the protestations of his chief of staff.

With the economy and some big banks both shaky, it was a good move.

Bush named Robert L. Clarke to a second five-year term as the nation's top regulator of more than 4,200 nationally chartered banks. During his first term, Clarke and his bank examiners raised the hackles of some bankers. They took a strict approach in forcing financial institutions to confront risky loans and were exacting in insisting that the rules be applied.

The industry nicknamed him "the regulator from hell," Clarke once told congressional panelists.

The offended bankers, many in New England with its troubled real estate loans, complained to Sununu, Bush's chief of staff. Rather than praising Clarke for doing a difficult job well in unpleasant times, Sununu apparently parroted the criticism and raised questions about reappointing Clarke.

Fortunately, Clarke had earned the respect of Treasury Secretary Nicholas Brady, and Bush reaffirmed his recommendation for Clarke's reappointment.

All this might be of little interest outside Bush's inner circle if not for the broader national implications.

The deposits in the nation's banks are insured by the Federal Deposit Insurance Corporation. Its chairman, L. William Seid
man, just the other day gave Congress a gloomy assessment of the big reserve funds that guarantee those deposits.

Bank balances continue to deteriorate, and the FDIC could lose $4 billion this year as it continues to bail out weak institutions. Only three months ago, Seidman's loss estimate was $3 billion.

The banking industry has had a number of spectacular casualties and close calls, and it needs watching.

Amid these cloudy days for banking, the Bush administration expects to propose sweeping reforms for financial institutions, which Congress will consider, next year.

All of that makes this a time for federal bank regulators to stay on red alert.

Clarke and his auditors found that many bank loan portfolios, especially those in New England, were seriously exposed to losses because of unwise real estate ventures. Clarke's office instructed these banks to cover their loans or fatten capital reserves, with the choice left up to them. But either alternative hurt.

The regulators' no-nonsense position merits praise, not criticism. It prods the banks to look at realities, however unpleasant, and get their lending practices in order before matters deteriorate further.

Clarke cannot be formally renominated until Congress returns in January. But the president acted prudently in announcing his choice now and putting rumors to rest. It's a solid nomination serving the public interest that both Congress -- and the bankers -- should not only accept but welcome.

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