The Seidman Saga

August 14, 1991

L. William Seidman, the tough, blunt overseer of disaster in the banking and thrift industries, is stepping down in his own good time, with his reputation flourishing and his foes in disarray. man who took on White House chief of staff John Sununu before it was fashionable, Mr. Seidman turned one of the most difficult jobs in government into a proving ground for integrity and truthfulness.

As chairman of the Federal Deposit Insurance Corporation when commercial banks were falling upon hard times and as chairman of the Resolution Trust Corporation formed to bail out the savings and loan industry, Mr. Seidman has been a key government figure during one of the most turbulent periods of U.S. financial history.

Unlike Treasury Secretary Nicholas Brady, he was willing to spill out the grim totals taxpayers will have to pay for the excesses of runaway, high-flying S&Ls. Unlike Mr. Sununu, he opposed, and defeated, a White House move to directly charge depositors, not banks, for insurance on their accounts. He called it the "reverse-toaster theory," a spoof on bank prizes for new customers.

For his services, he received little support from President Bush, who tried to push him out 15 months ago, until he realized that Mr. Seidman's stature was a great asset in dealing with the financial-sector crisis and the need for banking reform. Mr. Seidman's FDIC job will be filled by William Taylor, a Treasury official. His S&L bailout post will get a separate replacement. Mr. Seidman's departure will coincide with showdown time this fall on action in Congress on banking reform and a new multi-billion-dollar S&L plan.

The Seidman saga is testimony to the need for outsiders in government, persons who are neither bureaucrats nor professional politicians but independent private citizens willing to offer up their expertise on a limited-time basis. Such individuals perform best when they are in positions where fixed-term appointments give them protection from the self-serving pressures of the entrenched Washington Establishment. Mr. Seidman was right to hold onto his office until his term ran out. Now we can eagerly await his promised book on friends and enemies inside the beltway.

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