Working to clean up the damage to its finances and its image left behind by an alleged "rogue trader" who cost it $750 million, Allfirst Financial Inc. has enlisted a former Clinton banking official with the more staid reputation as a "rogue regulator."
Eugene A. Ludwig was once the top banking regulator in the nation. From 1993 to 1998, he implemented broad reforms and rewrote the country's community banking regulations.
And showing a quality that no doubt led to his latest endeavor, Ludwig did so while remaining in the banking industry's good favor.
He also survived two of the Clinton administration's thornier financial scandals, reputation intact.
"He would be superb in this kind of thing - a banker, a lawyer, highly intelligent, with five years of distinguished government service and unquestionable integrity," said Kenneth Guenther, president of the Independent Community Bankers of America.
"And, no, we're not normally quite so glowing when sizing up a government regulator."
A former banking and trademark attorney who attended Yale Law School and Oxford University with former President Bill Clinton, Ludwig was appointed Sunday by Allfirst parent Allied Irish Banks PLC to conduct a rapid inquiry into its surprise losses and propose corporate controls "so that it never happens again."
He was in Baltimore yesterday, beginning work on a report that Allied Irish officials want him to submit to them by March 9.
"Management wants an independent, outside authority to direct the investigation, and that's the right way to do it," he said in a statement released yesterday. "They've asked me to establish exactly what happened so that it never happens again."
Ludwig, 55, is managing partner of Promontory Financial Group, a Washington consulting firm. Through a spokeswoman, he said he will not grant interviews until his investigation is complete.
Within the banking industry, Ludwig is well known as a conciliator who could keep banks and consumers happy at the same time - even as he undertook some formidable changes to the industry.
Brought on to oversee banking matters for the Clinton administration even before the former president's inauguration, Ludwig was named Comptroller of the Currency in 1993. That post made him the top regulator for the nation's 2,500 national banks.
Mostly unknown before his appointment, Ludwig promised big changes to an industry swamped in paperwork.
"We were a bit suspicious of him," said Guenther.
But he largely delivered as promised. Ludwig endeared himself to industry leaders by eliminating regulatory rules and paperwork and expanding the power of national banks' subsidiaries. He simultaneously became a champion of consumer groups by broadening credit opportunities and ensuring more community investment.
Ludwig rewrote the complicated Community Reinvestment Act in a way that both boosted investments in local communities and reduced the regulatory burden on banks. That and other efforts earned him the title "rogue regulator" from U.S. Banker magazine, in a story shortly before his term expired.
"I think he had a lot of savvy, and he certainly understands the national banking system, how it runs and how it ought to run," said Stephen Verdier, director and legislative counsel for America's Community Bankers, an industry group. "He seems like a good choice."
Years before the collapse of Enron Corp., Ludwig warned that U.S. corporations were taking large risks in the derivatives and futures markets. After leaving government office, he became a vice chairman of Bankers Trust and helped prepare the troubled bank for sale to Deutsche Bank two years later.
Despite his successes in the back-office world of banking management and regulation, Ludwig's profile was relatively obscure in the Clinton administration. His biggest brushes with mainstream notoriety came in connection with the former president's more celebrated brushes with scandal.
In May 1996, Ludwig attended a White House "coffee" attended by several prominent fund-raisers for the Democratic National Committee. He said he didn't recognize the men, but called the meeting "inappropriate" and pledged to distance himself from such political activity.
Ludwig also was solicited for advice by Clinton regarding the Whitewater banking scandal to which the president was linked. Ludwig declined assistance and told Clinton that discussing the matter would be inappropriate, but was later subpoenaed by the special counsel appointed to investigate the Whitewater affair.
Born in Brooklyn, N.Y., Ludwig grew up in York County, Pa. His brother, Ken Ludwig, is an award-winning playwright whose credits include Lend Me a Tenor and Crazy for You.