Md. bank commissioner fired job merged with credit chief's

Muller is called unreceptive to reducing regulation

January 06, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Maryland Bank Commissioner Margie H. Muller was fired yesterday from the job she has held since 1983, after running afoul of Glendening administration appointees who wanted to cut the state bank regulation budget and consider less stringent regulation of some financial institutions.

Mrs. Muller's $76,119-a-year job as bank commissioner will be merged with the position of commissioner of consumer credit, which regulates mortgage companies, retail store credit card units, and other lenders that do not accept customer deposits.

The combined job will be filled by former Del. Henry R. Hergenroeder Jr., whom Gov. Parris N. Glendening named commissioner of consumer credit last year.

Mr. Hergenroeder will be acting bank commissioner until the General Assembly acts on the administration's request to merge regulation of the two industries under the authority of a single commissioner of financial regulation.

"We wanted to protect the consumer, but we weren't interested in regulating for the sake of regulating," said Eugene A. Conti Jr., state secretary of labor, licensing and regulation.

"Margie said, 'We can't change things. We have to keep doing what we've been doing, because it's so important.' She wasn't receptive to thinking about things anew."

Mr. Conti said Mrs. Muller balked at the idea of merging regulation of banks and finance companies, and at the idea of making some examinations less frequent and focusing the reduced examination schedule on institutions where there are signs of trouble, rather than on more routine, preventive regulation of healthy institutions.

The move also was made to cut the department's budget at the request of the governor, Mr. Conti said, noting that Mr. Glendening told him cuts in federal aid to the state make belt-tightening for fiscal 1997 necessary.

Mr. Conti said he had to eliminate one job or the other and chose to keep Mr. Hergenroeder because he is more receptive to trimming regulation.

"Here's one person who's forward looking and one person who's status quo," said Mr. Conti, who was named to his job in September.

4 "I don't have the resources to stay status quo."

The reorganization also eliminates the $62,622-a-year post of Deputy Bank Commissioner David Porter, Mr. Conti said. The department will cut about $500,000 from its financial regulation budget.

Mr. Hergenroeder was a part-time legislator for 28 years before deciding not to seek re-election in 1994. He is a former vice president of Equitable Bank.

The bank commissioner regulates 77 state-chartered banks with about $20 billion in assets, Mrs. Muller said.

Most of the state's largest banks are chartered by the federal government and are outside the state commissioner's jurisdiction.

Lee Miller, an attorney at Baltimore's Venable law firm, said larger banks have chosen federal charters because federal regulators have allowed them to expand the range of services they offer more readily than state commissioners have, and because a federal charter makes it easier for a bank to make interstate acquisitions.

Mrs. Muller said she and Mr. Conti had discussed changes, but that yesterday's action was still a shock.

"What this is about, I wish I could tell you," she said, adding that she learned of her dismissal 20 minutes before it was formally announced.

"When I saw the press release I was flabbergasted."

She said she has no argument with Mr. Conti's goal to focus regulation on consumer protection, but insisted that "the safety and soundness of our banks cannot be neglected."

Mrs. Muller got generally favorable reviews from leaders of the state banking industry, who greeted news of the reorganization with a cautious skepticism.

John B. Bowers Jr., executive vice president of the Maryland Bankers Association, said Mrs. Muller did a good job protecting the integrity of state banks during the 1980s, when many thrifts, regulated by another office, went belly-up.

"The verdict should be out" on whether the reorganization makes sense, said Jeffrey R. Springer, president of Citizens' Bancorp of Laurel and a former president of the Maryland Bankers Association.

But he expressed concern that a bank commissioner must enforce laws on community reinvestment, safety and soundness, deposit insurance standards and other issues that have no counterparts in the consumer credit field.

"Banking and consumer credit are two different things," he said. "At least on the face of it, there's no logical relationship."

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