Sunday, February 13, 2011
One of the key agencies regulating the banking industry has had an acting director since March 2009. John E. Bowman became Acting Director of the Office of Thrift Supervision (OTS) after his predecessor, Scott Polakoff, left the position having spent only one month on the job. Only four months later, in July 2009, a report by the Treasury Department Office of the Inspector General accused Polakoff of permitting six U.S. thrifts to backdate various deposits to make their financial condition look better than it really was. Polakoff retired from OTS the same month.
Part of the Department of the Treasury, OTS was created by Congress in 1989 as the successor to the Federal Home Loan Bank Board (FHLB), which was widely blamed for disastrous oversight failures during the savings-and-loan crisis of the late 1980s and early 1990s, although the policy of deregulating the industry was actually a more important cause of the crisis. The risky investment strategies that flourished under the FHLB, however, did not disappear with the advent of the OTS. In 2008, OTS was blamed for the two largest bank failures in U.S. history when the thrifts Washington Mutual and IndyMac Bancorp were brought down by their portfolios of subprime mortgages. Partly as a result, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), will abolish OTS as of July 2011, a change opposed by Bowman. OTS’s functions will be transferred to the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the new Bureau of Consumer Financial Protection.
Currently, about 1,000 OTS employees oversee 831 thrifts with assets of $1.57 trillion, as well as 470 holding companies with US assets of $8.5 trillion. Bowman also serves as an ex officio member of the Board of Directors of the (FDIC), the Federal Financial Institutions Examination Council (FFIEC), and NeighborWorks America, a congressionally chartered non-profit organization dedicated to the availability of housing for low- and moderate-income Americans.
A Californian, Bowman earned his Bachelor’s Degree at the University of California, and his law degree at Pepperdine University School of Law in 1977. His first position in the government was at the Department of Agriculture, where he served as a senior attorney in the Office of the General Counsel from 1978 to 1983. Bowman’s next stop was the Treasury Department. In 1987 he was promoted to deputy assistant general counsel and in 1991 to assistant general counsel for banking and finance. Bowman helped draft the proposal that eventually led to the creation of OTS, and he also had a leading role in drafting the FDIC Act of 1991, which gave regulators such as the OTS tools for dealing with banks and thrifts that lack adequate capital.
Seeking to capitalize on his knowledge of the financial industry, Bowman left public service and joined the Washington, D.C., law office of Brown & Wood, where he specialized in government and corporate finance, securities and financial services regulation. He returned to government service in June 1999 as deputy chief counsel for business transactions at OTS. In May 2004, he was appointed Chief Counsel, and in April 2007, he was appointed Deputy Director and Chief Counsel. He was subsequently promoted to chief counsel and deputy director before being appointed acting director in 2009.
-Matt Bewig
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