Lending Rules Eased for Federal Thrifts

U.S. federally chartered thrifts will be able to double their commercial lending under a new rule issued Wednesday by the Office of Thrift Supervision.

Congress is preparing to debate merging thrift and bank charter requirements during the next two years, and thrift representatives said the new rule will allow thrifts to act more like banks.

“It is a step toward giving thrifts the asset flexibility of banks,” said Brian Smith, director of policy and economic research at America’s Community Bankers, the lobbying arm of the thrift industry.

The regulation loosens lending rules for 1,397 federally chartered thrifts. They range from giants such as H.F. Ahmanson & Co. of Irwindale to smaller institutions such as New Castle, Ind.-based Ameriana Bancorp.

In the past, a federally chartered thrift’s total commercial loans could not exceed 10% of its total assets, because thrifts were created to support home lending. Under the new rule, a thrift’s commercial loans may constitute as much as 20% of its assets as long as the commercial lending beyond 10% is for loans granted to small businesses.

The new regulation implements a change Congress enacted earlier this year as part of a broader law reducing regulatory burdens on banks and thrifts.

Thrift executives will not rush into risky commercial lending ventures because they have become more cautious since the rampant failures that crippled the industry during the 1980s, Smith said. “The days of leaping before you look” are over, he said.

In addition, the OTS, a division of the Treasury Department, removed limits on thrifts’ ability to engage in credit card lending.