TIME: Almanac 1993/TIME Almanac 1993.iso/time/012191/0121201.000

Text File | 1992-08-28 | 7KB | 142 lines

                                                                                BUSINESS, Page 56

Special Report: Crisis in Banking

The Trail Boss of the Bailout


In command: a sharp-talking gunslinger straight out of Louis
L'Amour

By OTTO FRIEDRICH -- Reported by Gisela Bolte/Washington


    At the age of 69, on the threshold of the biblical life-span
of threescore years and ten, L. (for Lewis) William Seidman has
reached the enviable state of not having to prove anything to
anybody. He does not need to make a lot of money because he's
already a millionaire, with houses in Georgetown and on
Nantucket and a 15,000-acre cattle ranch in New Mexico. He
doesn't need to show he's fit because he still does 50 push-ups
before work every morning. ("After you've done that, anything
else for the rest of the day is a pleasure.") And as for his
powerful position, just across the street from the White House,
he can't be fired. President Bush very publicly tried to get
rid of him last spring, but Seidman just as publicly stood his
ground. This combination of confidence and courage is a very
useful attribute because Seidman's main purposes are to sell
off the charred debris of the S&L disaster and prevent any
similar debacle from devastating the commercial banking system.
About both problems he knows his own mind and freely speaks it.

    As head of both the Federal Deposit Insurance Corporation
and the Resolution Trust Corporation, Seidman holds what he
calls "the biggest damn lousy job in the country." Or to put
it another way, it is "a combination of a garbage collector,
an IRS agent and an undertaker." He was all those things last
week as he took over the collapsing Bank of New England.

    A risky venture, but Seidman (pronounced seed-man) is used
to living dangerously. Just last June he was out riding on his
ranch when his horse shied from an insect and started bucking.
"Rather than get thrown off, I jumped off," Seidman later told
a reporter. "I had a better chance to land right." The horse
dragged him some distance, though, and Seidman had to undergo
two operations to repair a fractured pelvis and hip. He still
uses a cane but hopes to get rid of it soon.

    Looking back, Seidman believes that probably the most
important influence on his life was World War II. Fresh out of
Dartmouth with his Phi Beta Kappa key in hand, he joined the
Navy in 1943 and was assigned to a squadron of nine destroyers
in the South Pacific; only two of the nine survived. "I thought
I was really blessed to be alive when so many of my friends
didn't come back," says Seidman. "The odds were pretty good
that I wasn't coming back, so I thought I'd better enjoy myself
and still do something for whoever it was that brought me back.
I therefore had a somewhat different attitude than you would
have if all you had done was gone to college and partied."

    After earning a law degree from Harvard, Seidman returned
to his native Michigan and got an M.B.A. at Ann Arbor. One
focal point of youthful idealism in those days was Michigan's
Governor George Romney, so Seidman served as his special
assistant for financial affairs. After doing a turn in the
family's accounting firm of Seidman & Seidman, he moved to
Washington as President Ford's chief economic adviser. With the
coming of Jimmy Carter, Seidman went back into business as vice
chairman of the Phelps Dodge mining company, then headed the
business school of Arizona State University at Tempe until he
took over the FDIC in 1985. Of all his wanderings Seidman says
with a wink, "I can't keep a job."

    In those wanderings, Seidman became a master of both
political infighting and self-promotion. He made many friends
in Congress, partly because he never turned down requests to
testify. When Seidman came under White House fire for excessive
independence last spring, one appreciative Republican
Congressman, Jim Leach of Iowa, said, "Bill Seidman is the Jane
Pauley of American government." Like Pauley, Seidman has been
very visible on TV lately, which he calls "getting your case
before the public." Is there perhaps also a bit of the ham in
him? Maybe not, but how many other short, bald, aged
accountants have appeared in a Robert Redford movie? (One of
Seidman's six children is a film director and got him a bit
part as a barroom customer in Ordinary People).

    Seidman's political and promotional skills led Congress not
only to put him in charge of the RTC as well as the FDIC in
1989 but also to insulate him from outside pressures. That
helped a lot when Seidman and Treasury officials began feuding
publicly about how best to clean up the S&L mess. At one point
the Treasury floated a proposal that the bailout be financed
by a fee on bank deposits. Seidman ridiculed the idea as "the
reverse toaster theory -- instead of the bank giving you a
toaster, you give one to them." The White House started letting
it be known that Bush was "interested in getting new
leadership" on the S&L problem. "It all would have worked out
amicably if they had not decided to attempt to move me out
through derogatory leaks," Seidman recalls. "I told them,
`Every time you do that, I'll stay  another month.'" Another
reason for the White House misgivings about Seidman: it was his
decision whether to sue Neil Bush, the President's son, for his
part in the $1 billion collapse of the Silverado Bank in
Denver. The FDIC filed suit against Neil Bush and 11 former
colleagues for $200 million last September.

    Seidman, whose six-year appointment expires in October,
actually does want to move on. It's just that he hates to leave
in the middle of a continuing bank crisis. "It's painfully
clear that I would have been smart to get out earlier," he
says, "but I am not as smart as I should be, and now I am
enmeshed in such a day-to-day battle that it's hard to find the
right date to leave."

    Looking beyond the S&L scandal, Seidman is fighting for
reform of the whole banking system. He argues that antiquated
regulations have prevented U.S. banks from remaining
competitive (Seidman's deep belief in the competitive system
led him to join with banker Steven Skancke last August in
publishing a cheerleading book, Productivity: The American
Advantage). If the government could simultaneously broaden what
banks are allowed to do but restrict their use of insured
deposits, he says in a Seidmanian flight of metaphor, "we would
have created sort of a minor miracle and ridden off in two
directions at once, successfully."

    But Seidman reaches his 70th birthday in April, and he has
many interests that lie far from banking. He likes raising
Corriente cattle, a kind used in rodeos. He likes growing
raspberries. He likes making mobiles (two of which hang from
the ceiling of his office). He has read all the 50 or so novels
of his favorite author, Louis L'Amour, and now he is starting
to reread them. "What do I like about him? The hero always
wins. The women are always pure. The horses are great. They are
out in the great West, and you learn a lot."

    If all else fails, there's always Hollywood.