Bill Seidman is one of the most interesting people I have ever had the privilege of covering. He died yesterday at the age of 88. News reports said he suffered a brief illness before passing away in Albuquerque, N.M.
Seidman became chairman of the Federal Deposit Insurance Corporation in 1985, the same year I started covering banking. By then, he had considerable high-level political experience. A native of Grand Rapids, Mich., he came to Washington D.C. when Rep. Gerald Ford of Michigan was named vice president. When Ford quickly became president, Seidman found himself setting up shop in the White House. He worked with Alan Greenspan, who chaired President Ford’s Council of Economic Advisors.
At that time, one of the big issues Seidman worked on was lending to less developed countries. Seidman was part of the regime that encouraged it, a position he later said he regretted. In the 1993 book he authored, “Full Faith and Credit,” he writes the “recycling of petro-dollars” was viewed as prudent policy. In hindsight, he writes, they should simply have encouraged oil producing countries to make the loans directly, rather than through the American banking system.
Seidman left Washington during the Carter years and early Reagan years. When William Isaacs resigned as head of the FDIC in 1985, Seidman was asked to become the 14th leader of the agency that was relatively obscure at the time. As the ag, oil and real estate crisis would develop, the agency soon would gain prominence as it resolved more than 200 bank failures a year by the end of the decade.
In “Full Faith and Credit” (which, sadly, appears to be out of print), Seidman notes that one of his first issues as FDIC chairman was dealing with Citicorp’s decision to reserve for 30 percent of its loans to less developed countries, an action precipitated by the policy Seidman had helped to develop during the Ford years.
Seidman was in the thick of the banking crisis, which started in Texas and then moved to New England. At the same time, banks in the Midwest were suffering from the ag crisis. Meanwhile, things were falling apart in the savings and loan industry and when the Resolution Trust Corporation was set up to handle assets from failed S&Ls, Seidman was named head of that agency, too.
When one thinks back on the late 1980s, it becomes amazing to realize the extent to which the White House and its U.S. Treasury Department were not engaged in the financial stress of the day. It is a much different scenario today where Treasury and President Obama (for better or for worse) are in the thick of the issues. In the late 1980s, the head of the FDIC/RTC was the most powerful player in the financial services regulatory game.
Seidman had a sharp wit and spoke candidly with bankers and reporters. He named his dog “Proxmire” after the Wisconsin Senator who headed the Banking Committee in the late 1970s and again in the late 1980s. He got into a political fight with President Bush’s Chief of Staff when he ridiculed a John Sununu plan to pay for the S&L clean up with a fee for opening bank accounts. He called it the “Reverse Toaster Tax,” playing off the idea that banks used to give customers premiums for opening accounts. The label stuck in the press and Sununu’s plan was dead.
Bill Seidman was the right guy at the right time, in terms of bank regulation. He was an accountant by training, so he understood the numbers. He had been a bank director. He also had owned a television station, so he understood what it was to comply with federal regulations. And he had some political savvy. He was very accessible to the press. We ran a feature on him in December of 1987, including a cover picture of him on the balcony of his office, with the Washington Monument in the background.
After he left the FDIC, he spoke to banker groups many times, and made hundreds of appearances on television as an expert analyst on financial and banking issues. I reviewed “Full Faith and Credit” shortly after it came out. I mailed him a copy, which ran in our Oct. 16, 1993 edition, and he sent me back a flattering hand-written note.
A couple of conclusions Seidman draws are worth reviewing, and seem particularly timely despite having been published 16 years ago. Consider: “Do not try to achieve social goals such as community reinvestment, minority lending, publicly supported housing, etc., through private-sector financial institutions.”
And, at the conclusion of his book, he writes: “The accomplishments of the United States of America are unmatched. Our future is bright. We have the American advantage: We are the freest people in the world. There is more opportunity for our people to move up economically and educationally than in any other country in the world. We have the skill and abilities of a multiracial nation. Our innovation and flexibility make us the leader in the industries of the future. If we do not allow ourselves to be destroyed by voting more from the federal treasury than we are willing to provide in taxes, our success will continue.”