PEOPLE : Harshfield Named Chief of Troubled Columbia S

Edward G. Harshfield, a former Citicorp and Household Financial executive, has been named chief executive and president of Columbia Savings & Loan, the Beverly Hills-based thrift struggling against mounting losses in its $3.8-billion junk bond portfolio.

Harshfield, 53, replaces Thomas Spiegel, whose family controls the thrift. Spiegel, 43, resigned Jan. 1 amid Columbia’s growing losses to form a new entity that is working to acquire Columbia’s troubled junk bond portfolio. Executive Vice President Kenneth R. Heitz, 42, who is Columbia’s main lawyer, had served as interim chief executive.

The naming of Harshfield, with his traditional banking and finance background, was viewed in part as a move to appease regulators, who have been scrutinizing Columbia closely as the thrift’s losses have climbed. Industry sources said that Harshfield’s appointment received something of an unofficial blessing from regulators, and that he met with them prior to taking the job. Regulators for years were wary of the maverick Spiegel and his huge junk bond investments, which make up about 40% of Columbia’s $9 billion in assets.

Spiegel’s 83-year-old father, Abraham, will remain chairman. As president, Harshfield fills a position formerly held by Lawrence K. Fish, who resigned last fall. Fish, 45, was named last week as chairman and chief executive of troubled Bank of New England in Boston.

Harshfield was unavailable for comment. He worked 13 years in the 1970s and early 1980s for Citicorp and its Citibank unit, spending much of that time in Asia and winning praise for setting up a successful consumer lending operation there.

He left in 1984 to join Household, where he was president and chief executive of Household Financial Services, a Prospect Heights, Ill., unit of financial services giant Household International. Harshfield revamped Household, introducing a number of new products and cutting costs. He left Household in 1987 and most recently has worked with Merrill Lynch on behalf of a limited partnership dealing in thrift-related investments.

Harshfield comes to Columbia at a crucial time. The thrift, trying to remold itself into a traditional S&L;, was put under moderate operating restrictions last fall following a $226.3-million loss in the third quarter, caused largely by the collapse of the junk bond market.

There is increasing speculation in the thrift business that regulators may further crack down on Columbia by putting it under even tougher restrictions.

Columbia is best known for its investments in junk bonds, which are high-yield, high-risk debt securities and its close relationship to Drexel Burnham Lambert, the investment bank that developed the junk bond market and collapsed last month.

Columbia was hurt by two developments: last summer’s new federal regulations requiring S&Ls; to sell their junk bonds by 1994 and a collapse in the junk bond market caused by such things as fears of recession and problems with major issuers. In addition, Columbia has been active in real estate development, also a high-risk investment for thrifts.

Columbia’s fourth-quarter earnings are scheduled to be released later this month. Although the thrift will show further losses on its junk bond investments, those losses are expected to be partially offset by previously disclosed gains it expects on other securities. Because of those gains, Columbia is expected to meet the most basic standard of capital--the financial cushion thrifts must maintain to protect against losses--set by regulators. But it is likely to fail two other key requirements.