New blood at the temple

Northwestern Financial Review, Mar 1, 2002 by Bengtson, Tom

Mark Olson brings his community bank roots to the Federal Reserve's Board of Governors.

Mark W. Olson, the former community banker from Fergus Falls, Minn., will never forget Black Monday, Oct. 19, 1987. It was the day of the American Bankers Association's annual convention opening general session. Olson, the youngest ABA president in the organization's history, was presiding and he was supposed to introduce Alan Greenspan, the newly-named chairman of the Federal Reserve Board. Greenspan arrived in Dallas, ready to make his first major address to bankers as arguably the most powerful man in the world. Upon landing, he asked about the condition of the markets. When he got the news, he reboarded the airplane and headed back to Washington, D.C., to handle the first crisis of his two-month-old chairmanship. Olson never got to make his introduction.

Flash forward 15 years. Olson doesn't have to worry about getting the ear of Fed Chairman Greenspan. As a Federal Reserve Board Governor since December, Olson now occupies an office next to Greenspan's. As he approaches his 59th birthday on March 17, Olson is at the pinnacle of a career that has included stints as a banker, political aid, consultant, and now high-profile regulator.

When President Bush nominated Olson to the Federal Reserve Board governorship last July, he was fulfilling the traditional expectation of bankers who wanted one of their own on the Board. There hadn't been a banker on the seven-member Board of Governors since 1995. North Dakota banker Terry Jorde was a leading candidate for the post, but the Bush Administration ultimately went with Olson. The nomination seems like a good fit for Olson, who has spent much of his energy during the last 20 years working for passage of a financial modernization law. Now, as a Fed Governor, he is the chief regulator for financial holding companies, a byproduct of the Gramm-Leach-Bliley Financial Modernization Act.

"After the passage of the Gramm-Leach-Bliley Act, the Federal Reserve Board was given an expanded role with respect to the whole financial services industry," Olson commented. "I have an interest in being a part of the process, as the evolution of the financial services industry takes flight. I am looking forward to being involved for the next eight years."

"He brings a banker's perspective to the board," commented R. Scott Jones, president and chief executive officer of Signal Financial Corp., of Eagan, Minn. "It is always good to have a regulator who has experience working with regulations."

Jones, an ABA president 12 years after Olson, grew to know Olson through the North Star Financial Association, a small peer group of Minnesota bankers. Jones pulled the group together 18 years ago to lobby Congress on key industry issues. Olson was particularly valuable to the group because he had worked for four years for former U.S. Rep. Bill Frenzel, a Republican congressman from Minnesota. Jones said it was Olson's political experience that made him so attractive to the ABA at the young age of 43.

"He led Bill Frenzel's legislative organization," Jones observed. "So he knew the Hill inside and out. He brought this valuable knowledge to the volunteer leadership of the ABA."

"We had some very serious issues to deal with at the time and he handled them marvelously," said Don Ogilvie, ABA executive vice president.

As ABA president, Olson led the industry past a moratorium Congress had imposed on new bank powers. Later, as a consultant with Ernst & Young, he worked with lawmakers, regulators and bankers in the debate surrounding the financial modernization bill, which culminated with passage of the Gramm-Leach-Bliley Act in November 1999.

"In the early 1980s when banks were not able to offer a market-rate instrument comparable to the securities industry's money market deposit account, dollars that had historically been strictly in banks and thrifts moved over into the securities industry," Olson said as he explained his passion for financial modernization. "The clear separation between banking and securities still existed in the law, but in the marketplace it had been clearly broached. From that point on, really up until the passage of the Gramm-Leach-Bliley Act, the banking industry was playing catch up in the market."

Olson left Ernst & Young two months before the passage of the Gramm-Leach-Bliley Act, later taking a job offered by Minnesota's Republican U.S. Senator, Rod Grams. Olson directed the staff of the Securities Subcommittee to the Senate's Banking Committee.

Now that the law has been in place for two and a half years, Olson and the Fed will be overseeing the 594 organizations that have thus far applied for financial holding company status. It is no surprise that one of Olson's first major speeches as a Fed Governor was titled "Implementing the Gramm-Leach-Bliley Act: Two Years Later."

Modest results so far

Olson acknowledges that industry changes resulting from the law so far have been modest. Where there was market demand, Olson commented, innovative banks already had figured out ways to meet the demand despite outdated law. "Gramm-Leach-Bliley brought the federal statute in line with what had already happened in the marketplace," Olson said.