First Nationwide Expects Fine, Order on Its Policies

Federal thrift regulators plan to fine Ford Motor Co.’s troubled First Nationwide unit an undetermined amount for violations stemming from transactions between the thrift and other Ford-owned savings and loans, the company confirmed Thursday.

In addition, First Nationwide said, regulators will make the San Francisco-based thrift enter into a supervisory agreement to improve management procedures.

The agreement requires First Nationwide to increase the number of annual directors meetings from four to 10 and to improve documentation of policies and procedures. First Nationwide also must show regulators in detail how it will comply with federal capital requirements, reduce problem loans and set aside adequate money to deal with bad loans.

First Nationwide, the nation’s third-largest savings and loan, has been a huge drain for the nation’s No. 2 auto maker. Ford has invested $1.2 billion in the thrift since buying it in 1985, including a $250-million injection during the fourth quarter of 1990.

In the final quarter last year, First Nationwide, citing problem real estate loans, reported a 46% drop in earnings to $19.1 million from $35 million a year earlier.

A First Nationwide spokesman said the thrift does not know the size of the fine. He added that the violations involve sections of the Federal Reserve Act governing transactions between affiliates. The thrift refused to specify how the rules were broken. In addition to First Nationwide, Ford owns savings and loans in Colorado, Illinois and Ohio.

In a statement, Ford characterized the violations as “primarily administrative in nature,” adding that it is trying to correct the problems. It added that neither the agreement nor the fine will have any impact on First Nationwide’s operation.

“There was no allegation of misuse of funds or improper financial management, and Ford did not benefit monetarily or otherwise from the practices cited,” the company said.

The supervisory agreement only extends to First Nationwide Bank, the company said, although regulators may also require one with First Nationwide Financial, the Ford holding company that owns the thrift.