The resignation of M. Danny Wall as head of the federal Office of Thrift Supervision provides an opportunity to simply abolish the agency and get on with the consolidation of savings-and-loan institutions with the banks.
President Bush's bailout plan for the many troubled thrifts rightly included significant consolidation of regulation, bringing the insurance of thrift deposits under the Federal Deposit Insurance Corp., which oversees bank deposit insurance. The FDIC chairman, L. William Seidman, now also serves as chairman of the Resolution Trust Co.--established under the bailout legislation to manage the assets of failed thrifts. In addition, the Treasury Department has been given a major oversight role. And there has been the beginning of a phase-in of more rigorous financial standards for the savings-and-loan institutions in an effort to bring them closer to the standards in effect for banks. Those more stringent rules are essential if the risk of another appalling failure is to be reduced. As it is, taxpayers face a $200-billion burden.
Consolidation of oversight should be seen as a further step toward terminating thrifts as a separate industry. The distinction between these savings institutions and the banks has become increasingly blurred to the point that a single standard, a single system is now appropriate.
No purpose would be served by naming a successor to Wall. The challenge for Treasury Secretary Nicholas Brady and for Congress, contrite over the role it played in creating this mess, is to speed the process already begun, bringing the thrifts into the world of banking where they now belong.