WASHINGTON - Deputy Treasury Secretary Frank Newman, the banking industry's most valued ally within the Clinton administration, resigned yesterday to return to the private sector.
Treasury Secretary Robert Rubin said President Clinton will nominate Lawrence Summers, under secretary for international affairs, as Mr. Newman's successor. Mr. Newman said he will stay on until Mr. Summers is confirmed by the Senate.
The former BankAmerica Corp. chief financial officer said in an interview Tuesday that he has grown tired of "the relentless pace" at Treasury.
"At BofA, there might be periods of time when the pace was intense," he said, citing the bank's merger with Security Pacific Corp. as an example. "But here, it's like that every day. It's just relentless, demanding, and it doesn't stop."
Although the former BankAmerica executive did not support banks at every turn, industry leaders regarded him as a crucial ally on issues ranging from financial modernization to regulatory relief.
With his departure as Treasury's No. 2 official, banking lawyer John D. Hawke - nominated for the post of undersecretary for domestic finance - becomes a more central figure for the industry.
"Because of his background, Jerry Hawke becomes a lot more important," said Edward L. Yingling, chief lobbyist for the American Bankers Association. Mr. Hawke is expected to be confirmed by the Senate soon.
However, one industry lobbyist said Mr. Hawke wouldn't entirely fill the void left by Mr. Newman's departure.
"Jerry Hawke is one of the finest bank lawyers in the U.S., but he doesn't have the same kind of day-to-day, hands-on experience of running a bank that Frank Newman does," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America.
Mr. Guenther warned Mr. Newman's departure "will weaken banking's voice within the Clinton administration."
Mr. Newman said he isn't sure where he will end up after leaving the Treasury Department. "I've been very careful about that," he said, alluding to ethics rules that prevent him from talking to prospective employers. "I haven't had any contact with anyone."
He said he hopes to begin discussions with prospective employers soon, and noted that he likes California, his former home, and New York.
During his two years at the Treasury Department, Mr. Newman spearheaded key elements of the administration's banking policy, including an early program to reduce burdensome regulation of banks and the Community Development Bank law. He helped shepard through the interstate branching bill, funding for the Resolution Trust Corp., and last year's regulatory relief bill.
Looking ahead, Mr. Newman expressed concern about the direction regulatory relief legislation is taking on Capitol Hill. The Treasury Department has previously urged lawmakers to drop ideas for cutting back the Community Reinvestment Act, and Mr. Newman said Tuesday "it would be a shame if regulatory relief got hung up because of disagreement on this issue."
Mr. Newman was sworn in as deputy secretary on Sept. 29, 1994, after serving as undersecretary since May 12, 1993.
