Chicago Fed Research Chief Didn't Wait Long to Create Stir

By Seiberg, Jaret | American Banker, July 17, 1995 | Go to article overview

Chicago Fed Research Chief Didn't Wait Long to Create Stir


Seiberg, Jaret, American Banker


William C. "Curt" Hunter didn't wait long before making waves for his new employer.

Four months into his job as the Federal Reserve Bank of Chicago's director of research, Mr. Hunter released an explosive study showing a wide disparity in rejection rates between marginally qualified applicants who were black and those who were white.

Mr. Hunter's study, released last week, counters a growing pile of fair- lending reports highly critical of the Boston Fed's work. (In 1992, the Boston Fed started a national debate with a ground-breaking study on lending bias at local institutions.)

It also drew immediate criticism from the banking industry, which decried it as statistically flawed and misleading.

But, the criticism didn't bother the Northwestern PhD, who said people always pick apart research results.

"I've been interested in these issues for years," Mr. Hunter said. "If you don't have an efficient allocation of credit, you won't have a robust economy."

Michael A. Moskow, president of the Chicago Fed, isn't bothered either.

"We had high expectations when we selected Curt, and he's certainly more than living up to those expectations," said Mr. Moskow.

Mr. Hunter, 47, joined the Chicago Fed as a senior vice president in March after a four-year stint as a vice president in the Atlanta Fed's research department.

Before that, Mr. Hunter taught at Emory University, Atlanta University, the University of Georgia, Chicago State University, and Northwestern University.

A 1970 graduate of Hampton Institute (now Hampton University), Mr. Hunter also worked for the Fed's Board of Governors in 1982.

Mr. Hunter said the driving force in all his work is market efficiency. "I'm a big believer in free markets," he said. "I consider myself to be a conservative economist."

***

The raft of megamergers may nudge regulators to improve the way they evaluate the quality of bank management, according to a couple of former supervisors.

John P. LaWare, who just retired from the Federal Reserve Board, and Robert L. Clarke, comptroller of the currency from 1985 to 1992, said that when banks combine the agencies worry most about internal controls and risk management systems.

"The first question is management," Mr. Clarke said in a phone interview from his office at the Bracewell & Patterson law firm in Houston. "Is there a point at which large banks become extremely difficult to manage?"

Of the five components of the regulators' Camel yardstick, Mr. LaWare said only "management" cannot be reduced to a numerical calculation.

"The weakest link in the Camel evaluation is management," he said. "When it comes to appraising the quality of management, it seems that all too often it is a derivative of the other four factors."

Mr. LaWare, who is now vice chairman of the Secura Group, said the government needs to upgrade its tools for judging bank managers.

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