Thrift Agency Is Investigating Peat Marwick
The Office of Thrift Supervision has initiated a sweeping investigation of KPMG Peat Marwick because of concern that the Big Six accounting firm tolerates conflicts of interest by partners who audit thrifts.
On May 14, the OTS subpoenaed all of KPMG Peat Marwick’s thrift audit records for 1989 and 1990. It informed the firm’s general counsel, Leonard Novello, of the “formal examination and investigation” in a May 15 letter.
Copies of the documents were obtained by the American Banker. The OTS, which regulates thrifts, declined to comment.
KPMG Peat Marwick must turn over thousands of documents to comply with the agency’s June 12 deadline.
In 1989 and 1990, the firm audited about 800 thrifts, which accounted for half the industry’s assets. The clients included 160 of the nation’s 300 largest savings institutions.
“The breadth of the request and the intrusiveness of the whole thing is just mind-boggling,” said Joseph Mauriello, national director of KPMG Peat Marwick’s thrift practice. “It falls into the category of a fishing expedition.”
Even though the firm denies wrongdoing, the investigation thrusts it into the spotlight in the OTS’ much-vaunted crackdown on professionals, including accountants and lawyers.
The 1989 thrift-bailout law gave the OTS authority to bring civil suits and enforcement actions against “institution-related parties” and to levy monetary penalties against them.
Last December, Coopers & Lybrand consented to an OTS cease-and-desist order stemming from its 1986 audit of the defunct Silverado Banking, Savings & Loan Assn.
The latest investigation comes in the wake of a recent OTS finding that a KPMG Peat Marwick partner improperly obtained $1.7 million in loans over five years from San Francisco Federal Savings & Loan Assn., a $3.4-billion-asset thrift that he was auditing.
The partner, Peter Meeks, and his firm say the loans were aboveboard. They were fully collateralized and met “the letter and spirit of every independence standard,” Mauriello said.
