S&L; Regulator Predicts Record FHLBB Actions

A top official at the Federal Home Loan Bank Board predicted Wednesday that the bank board will take a record number of enforcement actions this year as part of its effort to prevent more savings and loans from sliding into insolvency.

Ralph Christy, deputy general counsel of the bank board, told a group of S&L; executives in Los Angeles that “we expect a record number of enforcement actions over last year, and last year itself was a record.” The bank board is the principal regulatory agency for the nation’s 3,200 federally insured savings and loans.

Enforcement actions usually involve cease-and-desist orders or the removal of officers and directors at savings and loans whose financial condition is deteriorating.

Last year, the bank board issued 13 cease-and-desist orders and 22 removal directives, Christy said in an interview after his speech. Such actions are rarely made public, however.

Regulators believe that more timely enforcement measures will head off reckless lending practices that have contributed to the growing problem of S&L; insolvencies. Regulators have taken over eight S&Ls; in California alone in the past four months because poor-quality loans wiped out their net worth.

“We want earlier detection of the problems,” Christy said.

The stepped-up enforcement is possible in part because S&L; regulators are in the midst of doubling their examination staff. The present complement of 750 examiners nationwide will be increased to 1,000 by the end of the year and to 1,500 by next summer, Christy said.