Special Report: Crisis in Banking: The Trail Boss of the Bailout

By Otto Friedrich

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.

With reporting by Gisela Bolte/Washington