Passages: Bill Seidman D'43, T'44
When Bill Seidman D'43 T'44 took the podium at the Tuck last fall to talk about the recent financial freefall, he didn't mince words. "If we don't find an answer pretty quick, the real economy is going to be in the tank," he said to a capacity crowd of students, who spilled into the hall outside of Cook Auditorium. "There is a great urgency to find an answer soon." He should know. As chairman of the Resolution Trust Company in the early 1990s, Seidman helped push a speedy recovery from the nation's last great credit crisis, the savings-and-loan debacle. He did it with a combination of guts, wit, and forthrightness that has defined him in business as well as life.
Seidman passed away in May 2009 due complications from pneumonia at the age of 88, after an impressive life in politics and finance. He served as financial advisor to three presidents—Ford, Reagan, and the elder Bush—and chairman of the Federal Deposit Insurance Corp. from 1985 to 1991. Along the way, he developed a thick skin, necessary for weathering the intense political environment of Washington. "He was tough as nails," says Don Conway MD T'72, director of Tuck's Healthcare Initiative and a personal friend of Seidman, who was responsible for coaxing him up to Hanover last fall. "He could be a crusty bear on the outside, but on the inside he was such a warm person and did so much for other people."
From early on, says Conway, Seidman's life was defined by service. Born in Grand Rapids, Mich. in 1921, he graduated from Dartmouth in 1943. When his time at Tuck was cut short by war in 1944, he enlisted in the Navy for two years, earning a Bronze Star for bravery at Iwo Jima. After the war, he earned a law degree at Harvard and an MBA at Michigan State University before entering his family's accounting business.
Working for Michigan governor George Romney, Seidman caught the eye of then-congressman Ford, and spent the next few decades in Washington. His strategy for dealing with the S&L crisis was simple—break off banks' worst assets and sell them off at "fire sale" prices to investors, while rolling the healthy assets back into the regular banking system. At the time, he was widely criticized—including by members of his own administration—for selling assets too cheaply. But Seidman never wavered. Nor did he sugarcoat the direness of the situation. "He could drive his solutions in a very single-minded fashion, confident that they were right," says Conway. "At no point did he ever succumb to political pressure." Eventually the strategy paid off, getting buyers into the market and driving up prices, and making money back for the government on residuals. In the end, the Resolution Trust Company dispensed with an estimated $500 billion in failed assets at a cost to taxpayers of only about $130 billion.
More impressively, Seidman did it all without losing his legendary dry wit. He once quipped that his work combined "all the best aspects of an undertaker, an IRS agent, and a garbage collector." At his talk at Tuck last fall, sponsored by the Beacon Capital Partners Leadership Speaker Series, he noted that in bank failures of this magnitude, "there are only three groups of people who can pay for it—shareholders, creditors, or the government. And the first two have as their highest purpose getting the third to pay for it." In just under 40 minutes, Seidman gave one of the most lucid explanations of the financial crisis that anyone is likely to give, taking students through the various individual bad decisions that conspired to create a "perfect storm" of financial dyspepsia. (Among them: deregulation of derivatives, lifting the leverage cap on investment banks, and lack of supervision of subprime mortgages.)
Though he was one of the people who put together legislation deregulating the airline industries in the Ford administration, Seidman confessed to a change of heart in the past few years. "I am a deregulator," he said, "[But] the free market needs an age of a lot of government. Without that, it doesn't work." It's this kind of candor that will make him sorely missed as we dig ourselves out of our current financial quicksand. "The world needs a lot more Bill Seidmans," says Matt Slaughter, Signal Companies' Professor of Management and associate dean for Tuck's MBA program. "He had a nice long life, which is wonderful, but it would be great to have him here with us to figure out the mess we are in now."
