Agencies Move to Ease Ban on New State S
Less than two months after federal and state banking regulators ordered a halt to the opening of new savings and loans in California, they have begun moving to reverse that policy, The Times has learned.
A spokesman for the Federal Home Loan Bank Board said Friday that if California’s Department of Savings and Loan is able to hire a “substantial number” of additional bank examiners, the board will lift the ban.
“In recent times they have not had an adequate amount of examiners and supervisory personnel. . . “ said Frank Haas, director of the district bank system for the bank board. “If they are able to get whatever is determined as adequate level of staff and bring those people aboard, we will move forward with the process.”
In separate interviews Friday, officials of both the state and federal S&L; agencies said they are close to agreeing on the number of additional state examiners needed to properly monitor California’s existing institutions as well any de novo , or new, S&Ls; hoping to open. Haas said at least 30 new examiners would have to be hired.
Freeze Imposed
Last June, the bank board slapped a freeze on new associations in California, Texas and Florida, where state-chartered savings and loans enjoy liberal powers to invest depositors’ monies. The action reflected a belief in Washington that those states did not have enough bank examiners to monitor activities of existing institutions, let alone any new ones.
Haas said the bank board already has completed similar agreements with Texas and Florida regulators, and that the ban in those two states has been lifted.
California Savings and Loan Commissioner William Crawford--who recently commented that the state didn’t need any more S&Ls--said; Friday that he would ask the governor as early as this week for an emergency appropriation to fund the additional positions.
“There is no question I’ll be asking for more examiners . . . “ Crawford said in a telephone interview. “We are understaffed enough to ask for more.”
Number Has Grown
Currently, there are 58 examiners and nine appraisers in charge of monitoring California’s almost 160 state-chartered savings and loan associations. Crawford said that from 1959 to 1981, the commissioner’s office typically received only seven new applications a year, whereas in the last three years the number skyrocketed to about 74 per year.
“If we approved all who applied, we’d need like 174 field examiners, appraisers or supervisors,” Crawford said. “We’ve never had that many.”
The federal freeze affects 48 S&L; applicants from California who are awaiting deposit insurance approval from the bank board.
The state freeze affects about 100 additional de novos , regulators said. New state S&Ls; in California must first get charter approval from the Department of Savings and Loan and then must get the green light from the bank board for deposit insurance.
“The number of new examiners was the test that was put on California,” said Robert Shafton, a Los Angeles savings and loan attorney. “But what was really at issue was if FSLIC was going to have the ultimate responsibility to pick up the pieces if bad investment policies were followed, the Federal Home Loan Bank Board ought to have some control over examination procedures,” he said. FSLIC is the Federal Savings and Loan Insurance Corp., which insures deposits up to $100,000.
Although Crawford appeared to support the bank board’s actions in June, saying that the state did not need any more savings and loans, he said Friday that it is his job to “help everybody in the industry and everybody who is trying to get into the industry.”
“Every institution needs tutorial help,” he said, referring to the guidance that department examiners can provide to S&L; officials. “There is only so much qualified management out there . . . only so many qualified directors.”
5 Taken Over
So far this year, five California S&Ls; with assets totaling more than $7 billion have been taken over by federal savings and loan regulators. They were Beverly Hills Savings & Loan Assn.; Southern California Savings & Loan, also in Beverly Hills; Bell S&L; Western Community S&L; in El Cerrito, and Central S&L; in San Diego.
California, with 10.5% of the nation’s population, has 29% of all savings and loans assets in the country and is home for more than half of all the proposed new S&Ls; awaiting insurance approval from the bank board, Crawford said.
