Rescue of S&Ls; Being Speeded Up : Bank Board Chairman Encourages Potential Investors
Federal savings and loan regulators are moving faster than ever to sell or shut down the country’s sickest thrift institutions by the end of next year, the nation’s top thrift regulator said Wednesday.
M. Danny Wall, chairman of the Federal Home Loan Bank Board, and other regulators were upbeat as they told more than 350 potential investors gathered at the Fairmont Hotel about the benefits of putting money into the thrift industry.
“Don’t lose sight of the fact that 90% of the industry is doing quite well,” Wall said.
The meeting was the second in which regulators have talked directly to investors about the opportunities in the thrift industry and the help regulators can give them if they buy thrifts that already are under water--that other 10% of the industry.
As with the meeting in Atlanta last month, this one had a capacity audience. And 500 other potential investors were turned away.
At least 259 S&Ls; are insolvent but still operating under the aegis of the bank board and the Federal Savings and Loan Insurance Corp. It is the problems of those “wards” of the bank board that Wall said he hoped to resolve by the end of next year.
So far, 77 insolvent thrifts have been sold or closed this year, up from 48 for all of last year. This year’s figure includes Tuesday’s regulatory approval for the acquisition of insolvent Bell Savings & Loan Assn. of San Mateo, Calif., by a company headed by former Treasury Secretary William E. Simon.
A Faster Process
Wall acknowledged that investors have found negotiations with regulators to be a slow and difficult process, but said his agency has taken steps to shorten talks.
“I promise the process is faster than what you may have heard from those who came before you,” he said.
Gerald J. McQuarrie, chief executive of Downey Savings in Newport Beach, is among those who have said that negotiations with regulators can be difficult.
Downey executives have been talking with regulators since last October about purchasing insolvent Butterfield Savings in Santa Ana and have made more than a dozen trips to see bank board negotiators in San Francisco and Washington.
McQuarrie said Wednesday that he was getting “fed up” with the negotiations, adding that “We’ll close (the acquisition) by the end of September or we’re not going to close at all.”
At least one more California thrift--and possibly more--will be sold or closed by the end of September, said Michael Patriarca, agency group director at the Federal Home Loan Bank of San Francisco, one of the 12 district banks in the bank board system. He would not identify the S&L.;
While Wall tried to lure potential investors to help solve the problem of insolvent thrifts, House Banking Committee member Henry B. Gonzalez (D-Tex.) said in Washington that the Federal Savings and Loan Insurance Corp. should get a $50-billion Treasury Department loan or credit line to close down failing institutions.
He said FSLIC, which insures depositors’ savings at member institutions, has less than $2 billion left to help failing thrifts. FSLIC’s cash drain was exacerbated last week when it cleared mergers involving 20 insolvent Texas thrifts. On Thursday, the federal insurer committed $1.3 billion in aid to merge 12 thrifts, and on Friday it backed a $2.5-billion note for eight more.
