IN THE MIDDLE of the worst US banking crisis since the Great Depression, George Bush turned to William Taylor late last year to rescue the Federal Deposit Insurance Corporation (FDIC), the insolvent fund that insures US bank deposits - a recognition, like no other, of Washington's abdication of its regulatory responsibilities during the last decade. For Taylor was the sort of career public servant ignored during the easy-money days of the Reagan presidency, when bankers financed even the most dubious ventures, freely doling out loans guaranteed by the taxpayer.
Taylor was an independent bank examiner who insisted that the industry pay its own bills. 'The best way to get the government out of the banking business,' he told the industry's well-connected lobbyists, 'is to keep the banking business out of the public's pocket.' With the FDIC dollars 7bn in the red and hundreds more banks threatened with failure, Taylor's first act as chairman of the agency last October was, ironically, to borrow dollars 70bn from the US Treasury to prevent its collapse. The worst is now clearly over for most US banks - thanks largely to declining US interest rates - but right up to the time of his death, Taylor was obliged to fight with the industry to replenish the fund, to ensure the banks will not have to call on their many friends in Congress to bail them out again.
Before taking his job, Taylor was the senior bank regulator at US Federal Reserve - where he handled crises ranging from the run on the Bank of New England to the worldwide shutdown of the Bank of Credit & Commerce International - and he was a persistent advocate of early intervention at troubled banks. When he died, he was working on plans for 'bank hospitals', in which teams of managers would take over ailing institutions before they failed, using FDIC money to nurse them back to health before they were sold.
Taylor was born on Chicago's south side in 1939, the son of a Scottish immigrant. He spent all but eight years of his career as a bank regulator and eschewed the usual bland language of bureaucrats. He once described his job bluntly: 'Get the money and fix the banks. It's what the public wants, what the banks want and what will do the country good.'
Paul Volcker, the former chairman of the Federal Reserve, who oversaw Taylor's work for a decade, said Taylor 'had no political sponsors, nor did he seek any'. At the end of the 1980s, when pressure from the industry's allies in Congress grew fierce, Taylor forged a potent alliance with William Seidman, his predecessor at the FDIC, allowing them to pursue their enforcement agenda.
Taylor was acutely aware of the opposition his tough stance generated, notably in a pre-election period when the Republican Party is searching for scapegoats for the faltering economic recovery. Anticipating blame for the credit crunch when he forced the raising of insurance premiums in May, he warned his wife that he might soon be pumping petrol for a living.
Taylor took a substantial pay cut when he left the Federal Reserve for the FDIC. But in the midst of dire warnings about the imminent collapse of the US financial system, it was too good an opportunity to pass up, he told one interviewer last year. 'How could you spend your whole life in banking and then not take this job? It would be a rejection of everything you've ever thought about.'