Dallas banker Jim Erwin has probably dealt with more troubled loans than anyone else in America.

In the late 1980s, he headed the "bad bank" of First RepublicBank Corp., which was responsible for dispensing with $12 billion in problem loans and foreclosed assets in Texas' largest financial failure.

Unlike the Resolution Trust Corp., which became the butt of jokes for its savings-and-loan property fire sales, Mr. Erwin emerged from the Texas banking debacle with a reputation for being a sharp negotiator who got more money for the Federal Deposit Insurance Corp. than anyone had expected.

As Jim Gardner, a banking competitor back then, puts it: "Jim understands the process. Divorce emotion. Pay attention to detail. Have patience."

"He's always the smartest guy in the room," says retired banker Ron Steinhart.

Today Mr. Erwin, 64, is a founder and director of First Private Bank of Texas, which caters to high-net-worth professionals. He's never been involved in anything remotely akin to subprime home loans.

But he fought too hard in Texas' financial meltdown not to care about what's happening now.

If he could share his thoughts with regulators and bank auditors, he'd urge them not to act in haste, to take a longer view of problem loans and to remember what happened here.

Mr. Erwin warned the folks in Washington back then that if they continued to force Texas banks to write down real estate to current market values, they'd be signing the banks' death warrants. Simply put, there was no current market.

"I can go down the street and point out buildings that we had through foreclosure that we could not find a buyer for – even at 20 cents on the dollar at an auction," Mr. Erwin says. "Now they're full and worth a lot of money. People who were able to come along and buy them are very rich."

His pleas mostly fell on deaf ears. Now he hopes more will take heed.

"Many of these loans today are for good projects, but because of current economic circumstances, they're temporarily impaired – whether it's an office building or multifamily housing project or a piece of well-located land.

"If you take the immediate short view that there is no value, you get drastic results. It was true then, and it's true now."

Last month, the Securities and Exchange Commission announced that it was reviewing the "mark to market" accounting rule that mandates valuing assets at the price they sold for most recently. Mr. Erwin sees this as a small step that will have limited results.

"The accounting industry is firmly entrenched in support of mark to market," he says. "This will have little effect on bank regulator rules on reserves and write-downs of individual loans. They need to give banks more time to write off temporarily impaired assets. Ask them to put up some reserves this year, and if the situation doesn't get better, make them put up more reserves next year."

A cash-strapped company such as General Motors Corp. should be required to write down values immediately, Mr. Erwin says. "But we need a more common-sense approach that doesn't force healthy companies and banks to temporarily write down assets just because somebody else did."

Mr. Erwin was only 39 in 1983 when problems started cropping up at InterFirst Bank Dallas.

In 1986, a merger with Republic of Texas Corp. seemed the only answer. Mr. Erwin led InterFirst's team that pored over the crosstown rival's books. He knew the marriage that would create First RepublicBank Corp. was one of convenience, not salvation. And he was right.

The next year, the FDIC turned over management of First Republic to former American Airlines chairman Al Casey, who asked Mr. Erwin to lead a team to come up with a restructuring plan.

Instead, the FDIC handed over First Republic to NCNB Corp. in Charlotte, N.C., in 1988. And again, Mr. Erwin took a pivotal role.

All the problem loans went into the "bad bank." Mr. Erwin, 44, was king of the heap as its president.

"I might have been more nervous had I realized how big a job that was going to be," he says with a chuckle.

The workout bank became Amresco – short for Asset Management Resolution Co.

At its peak, Amresco employed 1,500 people and worked to sell assets once valued at $12 billion – about a third of First Republic's total.

No one knows exactly how much of that was recouped under Mr. Erwin's leadership, but it was more than most expected. He and his staff became so good that other banks and thrifts turned over their property to Amresco.

Why does Mr. Erwin think he had more success than the RTC?

For one thing, he and his staff tried to avoid foreclosures.

"If you foreclose, people file bankruptcy, and you get tied up in the courts. We sat down and tried to negotiate an equitable settlement that gave both parties a better position than they would have had if we went through an extensive legal process."

That's another lesson he hopes others will learn.