Bank Board Chief Promises Surprises : Regulator Says ‘Stay Tuned,’ Moves Will Be Positive for S
The top federal regulator for savings and loan companies said Wednesday that he may have some surprises for the ailing industry and will continue to order more liquidations, acquisitions or mergers of S&Ls; this month.
M. Danny Wall, chairman of the Federal Home Loan Bank Board, told an advisory group of bankers and others affected by the industry that the three-member board is still considering actions to take but has “focused on a direction.”
He said the moves would be “very positive for the industry” but may not be what anyone expects.
“I have nothing more to say other than ‘stay tuned,’ ” said Wall, who had made a similar statement to a National Council of Savings Institutions in New York a day earlier. “Hold on to your hats,” he told the S&L; executives. “We are going to be taking steps that are going to surprise everyone.”
The council and the larger U.S. League of Savings Institutions have sharply different views on how to approach the industry crisis. Estimates of the amount of money that it will take to bail out or liquidate failing S&Ls; range from $50 billion to $100 billion.
The council, two thirds of whose members are savings banks whose deposits are insured by the Federal Deposit Insurance Corp., proposed Tuesday that FDIC insure all savings institutions, not just banks.
FSLIC Can’t Cover Deposits
The proposal would dismantle the nearly bankrupt Federal Savings and Loan Insurance Corp. after about five years, during which the insurer would liquidate the remaining insolvent S&Ls.; FSLIC insures deposits in S&Ls; but no longer has enough money in its accounts to cover deposits in all those expected to fail.
The larger league, which includes some S&Ls; that are not healthy enough to join FDIC, wants to retain the separate systems for savings institutions and banks.
Wall made no comment on those differing proposals but said the board is examining several ideas for dealing with the industry’s problems.
He said up to 60 financially troubled savings institutions will have been dealt with by year-end, with about 200 more to be dealt with next year.
A large proportion of the S&Ls; the board has had to deal with are in Texas, Oklahoma, Louisiana, Arkansas and New Mexico, where low oil and natural gas prices have hurt the economies.
Board member Roger Martin noted that the bulk of savings institutions remain strong and suggested that the industry conduct a campaign to counteract the bad publicity that inevitably will result from continued S&L; liquidations.
