Management Not Major Woe in Nation's Banking Industry/say Forum Panelists

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Management is not the major problem in the banking industry, according to panelists on a regulatory forum Thursday at the Oklahoma Bankers Association Convention.

While the major problem was seen as organizing assets sales by Michael Newton, regional director of the Federal Deposit Insurance Corp. in Dallas, other regulators on the panel did not identify a problem. In most cases, however, they said management is not an issue.

Tom Hoenig, senior vice president in the division of bank supervision and structure for the Federal Reserve Bank of Kansas City, said he had been misquoted in an article as saying the main problem in the banking industry is management.

"That's not what I meant," he said. If management of a bank makes loans based on the "good ole' boy" policy, he explained, then it will find itself in the "soup" when the economy turns down.

"If management is conservative, we will probably work through this," Hoenig said. "If it is good management, they can manage themselves through it."

Peter C. Kraft, deputy comptroller for the Office of the Comptroller of the Currency's Southwestern District, said that while the oil boom spawned speculative banking practices, bankers have learned from mistakes exposed through past bank failures.

"I think most folks have their eyes on the right ball and are doing a good job," he said. "I wouldn't want to continue to stress management."

Though the statistics on the number of failed banks last year appear to be staggering, the numbers should be put into perspective with the industry, according to Kenneth L. Walker, regional director of the FDIC's Dallas office.

Walker said only 1 percent of the total banks in the country have failed.

"That is not horrible in any other industry," he said, "but it is here because it is unprecedented since the Depression."

Robert Empie, Oklahoma State Banking Dept. commissioner, said two-thirds of all banks in Oklahoma are of no concern to regulators because their financial conditions remain unblemished. …