FDIC’s Innovative Chairman Taylor Dies : Banking: His death leaves a leadership void at two of the industry’s top three regulatory agencies.

William Taylor, chairman of the Federal Deposit Insurance Corp. and an advocate of imaginative solutions for the nation’s troubled banks, died Thursday of complications following colon surgery.

Taylor, who was 53, was appointed last October to head the vital agency that insures bank deposits up to $100,000.

Andrew C. Hove Jr., the FDIC’s vice chairman, will serve as acting head of the agency until a new chairman is chosen.

Taylor was an activist chairman and overcame banking industry opposition to push through increases in the premiums charged banks to support the insurance fund.

Taylor had also been working on new techniques to handle future bank failures by minimizing the strain on the insurance fund, which is facing its worst financial crisis since it was created in the Great Depression.

Taylor’s death leaves a leadership void at two of the three top federal bank regulatory agencies. The Office of the Comptroller of the Currency, which regulates national banks, has been headed by an acting administrator since early this year, when the Senate rejected the nomination of former Comptroller Robert L. Clarke to a second term.

A permanent replacement for Taylor probably will not be chosen until after the presidential election in November. The FDIC director must be confirmed by the Senate. But the Democratic-controlled Senate, hoping for a Bill Clinton victory, is expected to postpone action on a replacement for Taylor, whose term was scheduled to run until next Feb. 28.

Meanwhile, the agency will be directed by Hove, a veteran of 30 years in the banking business and two years as vice chairman of the FDIC.

Years of escalating bank failures have depleted the deposit insurance fund, which had a deficit of $7 billion at the end of last year. The deficit threatens to become much greater, because the FDIC’s list of ailing banks includes 1,000 institutions with total assets of more than $600 billion.

Taylor, a career government regulator, was a friendly man who eschewed the usual bland and careful language of many 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.”

Under Taylor’s direction, the FDIC was working on plans for a bank “hospital” under which the FDIC would provide funds for ailing institutions and hire a temporary manager to nurse a bank back to health so it could be sold to private investors. This would be cheaper for taxpayers than closing the bank and paying off depositors. He also wanted the agency to explore a myriad of other ideas to hold down the cost of disposing of crippled banks.

Taylor drew tributes from the banking industry, his regulatory colleagues and members of Congress.

“Bill Taylor stands out . . . as the man who stood up to the most powerful political and financial forces in our country, never compromising his integrity,” said Rep. Henry B. Gonzalez (D-Tex.), chairman of the House Banking Committee.

Taylor was “a true leader and professional in every sense,” said Timothy Ryan, director of the Office of Thrift Supervision, who worked closely with Taylor on regulatory issues.

American Bankers Assn. President Alan R. Tubbs called Taylor “an able and honest leader with the best interests of the nation at heart.”

Taylor died at Fairfax Hospital in Fairfax, Va., where he had undergone an operation last week to remove a blockage in his colon. He developed pneumonia over the weekend. The official cause of death was not announced.

Taylor spent most of his career with the Federal Reserve Board, where he rose to the rank of director of the division of banking supervision and regulation.

A native of Chicago, Taylor joined the Federal Reserve Bank of Chicago in 1961 as a bank examiner after his graduation from Cornell College in Mt. Vernon, Iowa. In 1968, he became vice president of lending at Upper Avenue Bank in Chicago, and in 1972 joined the Chicago office of James W. Rouse & Co., a real estate development firm.

He returned to the Fed in 1976, joining the bank supervision division. He rose to the top of the division through a steady series of promotions in key management jobs, but still referred to himself as, first and foremost, a bank examiner.

He also served in 1990 as acting president of the oversight board for the Resolution Trust Corp., the agency handling the disposal of hundreds of failed savings and loan associations.

Taylor is survived by his wife, the former Sharon Spaven, and three children, Claire, Emily and William III.

Bio: Andrew C. (Skip) Hove Jr.

Vice chairman of the Federal Deposit Insurance Corp. Becomes acting chairman after the death of Chairman William Taylor.

* Age: 57

* Education: B.S., University of Nebraska at Lincoln, 1956.

* Family: Wife, Ellan. Children: Catherine Breen, Chris and Nancy.

* Resume: Former chairman and chief executive of the Minden Exchange Bank & Trust in Minden, Neb., where he worked for 30 years. Mayor of Minden, 1974-82. President of Nebraska Bankers Assn., 1984-85, and president of Nebraska League of Municipalities, 1980-81.

* Business philosophy: Champion and tireless defender of the small local banks chartered by state governments.

* Quote: “Community banks are the bright spot of the banking industry.”