government include numerous individuals with extensive experience related to the industries they oversee. Federal Deposit Insurance Corporation ("FDIC") Chairman William Seidman, Federal Reserve Board Member John LaWare, and Comptroller of the Currency Robert Clarke are but three prominent examples. We fully support the urgent need to fill the vacant position, but there are better ways to meet that need than to confirm this nominee, who lacks the basic qualifications for this key post. THIS IS A CRITICAL APPOINTMENT A. Regulator of the Savings and Loan Industry The Director of the OTS will be the primary regulator of the nation's savings and loan industry, which includes approximately 2,500 institutions. As of the fourth quarter of 1989, roughly 700 of these institutions were losing money. How well these institutions are regulated will have important consequences for these institutions and their depositors, and could make a difference worth tens of billions of dollars to the deposit insurance fund and the taxpayers who stand behind that fund. Failure to make the best choice to head the OTS could be very expensive for America. The next Director of the Office of Thrift Supervision will be charged with implementing the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") -- landmark reform legislation that substantially altered the form and substance of savings and loan regulation. To implement that legislation successfully, the Director of OTS must clearly understand both the policy dimensions of thrift regulation and the practical consequences of policy choices for thrifts, thrift depositors, and the deposit insurance fund. Mr. Ryan's forceful pledge to "get things done" cannot substitute for such understanding. B. Director of the Federal Deposit Insurance Corporation If the Director of the OTS only had to regulate a large industry in deep crisis, we think that task alone would demand a knowledgeable, experienced nominee. But, in fact, the Director will have two additional jobs of formidable importance. First, the Director of the OTS will also serve as a member of the Board of Directors of the Federal Deposit Insurance Corporation ("FDIC"), the primary regulator of 7,950 statechartered commercial banks and deposit insurer of the entire banking industry. According to some analysts, problems in the commercial banking industry are increasing. In the past six months, many large banks have reported hundreds of millions of dollars in real estate loan losses. Some major banks are exposed to shaky leveraged buyouts while others still have large exposures in less-developed countries. The Board of Directors of the FDIC could have a critical policy role to play in protecting the safety and soundness of the nation's commercial banks. C. Director of the Resolution Trust Corporation The Director of the OTS will also serve as a member of the Board of Directors of the Resolution Trust Corporation ("RTC"), the entity FIRREA established to dispose of the assets of failed thrift institutions. The magnitude of the RTC's asset disposition task is unprecedented in American history. The Administration has estimated that the RTC may ultimately have to dispose of over $500 billion in assets. How swiftly the RTC can dispose of these assets, and how much money it can get for them, will make a big difference in the bottom-line cost of the thrift crisis to America's taxpayers. D. A Five Trillion Dollar Job In sum, the position of Director of the OTS, and member of the FDIC and RTC Boards of Directors, carries with it responsibility over nearly $5 trillion of assets at federally insured institutions. This includes $3,579,000,000 of assets held by 13,188 commercial or savings banks under the regulatory supervision of the FDIC, $1,080,000,000 of assets held by 2,513 thrifts under the regulatory supervision of the OTS, and $216,000,000 of assets held by 402 failed thrifts in RTC receivership or conservatorship. Never before in our national history has so much power and responsibility been consolidated in the hands of a single financial institutions regulator. This is an awesome task of unprecedented scale and importance. Yet we are offered a nominee with a stunning lack of experience in financial institutions regulation or management. THE NOMINEE'S QUALIFICATIONS In response to the Committee's questionnaire, Mr. Ryan stated: I believe that my experience of almost two decades in We disagree. From 1983 forward, Mr. Ryan has been a partner at a law firm in which he has specialized in labor law. Prior to that, he served as the Solicitor of the Department of Labor from March 1981 to April 1983. From 1976, when he graduated from American University Law School, to 1981, Mr. Ryan held other positions as a lawyer with private law firms and political campaigns. Nowhere in this record do we find the demonstrated management ability and financial institutions expertise that a Director of the OTS should have. In our judgment, the Administration has put forward a nominee who lacks the requisite qualifications for the job. A. Lack of Banking or Thrift Expertise In testifying before the Committee, Mr. Ryan frankly admitted that his experience with banks and thrifts was limited to pension issues and some representation of the National Association of Financial Guaranty Insurers on risk-based capital guidelines: Mr. Ryan: My background is principally as a pension lawyer The Chairman: Now, how so? I mean, what's the nature of Mr. Ryan: Yes, Senator. My experience as an attorney really Transcript of Proceedings: Nomination of T. Timothy Ryan, Jr., of At several points in his testimony before the Committee, Mr. Ryan candidly confessed the legitimacy of concern over his inexperience with financial institutions: To be quite frank with the entire panel, I was surprised when I received the call, just as those of you who are on the panel here, you've looked at my background. Transcript, 63. Again: I think the questions that have been raised by really all the |