S&Ls; Say Regulators May Be Hurting Recovery : Thrifts: Industry executives say overly harsh agency reviews are scaring off investors. If it keeps up, they add, some firms that could survive may not.

Savings and loan executives meeting here Monday said federal regulators’ zeal in trying to protect taxpayers is producing inconsistent, overly harsh reviews of thrifts that are scaring off investment dollars needed for survival.

In a theme heard repeatedly at the annual U.S. League of Savings Institutions convention, thrift executives complained that regulators are pressuring them to bolster the financial cushions that protect against losses. At the same time, they said, regulators are scaring off investors through tough examinations that force thrifts to set aside large amounts of money to cover potential losses on loans. Regulators also are pressuring them to cut or eliminate dividends, they said.

As a result, they maintained, investors are shunning thrifts. The uncertainty caused by the government’s actions, they contended, could result in the failure of some savings and loans that otherwise might survive.

“Government must not smother us with its attention. Government must give us room to breathe . . . to catch our breath before the next hurdle,” said Kenneth D. Seaton, chairman of the trade group.

Regulators from the Office of Thrift Supervision and the Federal Deposit Insurance Corp. have been marching through the S&L; industry, putting thrifts through tough examinations in an effort to contain the tab that taxpayers will pay for failed S&Ls.; That tab already has grown to an estimated $600 billion over 40 years.

The agencies are forcing S&Ls; to recognize more real estate loans as problems and leaning on them to set aside large amounts of money for unspecified losses that may occur in the future. Stocks of thrifts have plunged, which investors say is partly due to the uncertainty caused by the reviews.

In California, thrifts such as Coast Savings Financial in Los Angeles and First Nationwide Financial in San Francisco have posted large losses after their regulatory examinations. Some analysts believe that nearly all major S&Ls; in the state will have to post losses when regulators get around to reviewing them.

One of the biggest complaints heard Monday is that the OTS and FDIC have widely different views about the health of real estate loans, with the FDIC generally acknowledged as taking a tougher tack. In addition, executives complained that they are being forced to set aside too much money for unspecified possible future problems on loans that may or may not occur.

Two top regulators, OTS Director Timothy Ryan and Michael Patriarca, who heads the OTS’ San Francisco office, acknowledged that examinations have been inconsistent. In a sharply worded comment, Patriarca told one panel that thrifts are getting confusing messages from OTS and FDIC examiners.

“I think it’s embarrassing that the government hasn’t gotten its act together better than it has and is speaking with multiple voices,” Patriarca said.

Ryan said he recognizes that the examination process is subjective. He said he hopes one of his actions--consolidating the OTS’ 12 district offices into five regional offices--will make examinations more consistent.

Ryan offered no other specifics. He also said he did not know how to send investors a clearer signal of what to expect for thrifts.

“I don’t have the $64,000 answer. I just know it’s a problem, and it’s one we are struggling with,” Ryan said.

Robert E. Lackovic, chief executive of First Nationwide Bank in San Francisco, said regulators examined the San Francisco thrift much more thoroughly than in the past.

“You don’t get a lot of credit for past history. It doesn’t make a difference how you’ve done in the past,” he said.