U.S. savings and loans added a record amount to accounting provisions for bad loans, but the industry's net loss narrowed to $617 million in the first quarter from $8.75 billion in last year's fourth quarter.
In the year-earlier first quarter, the thrift industry had a profit of $3.61 billion, the Treasury Department's Office of Thrift Supervision in Washington said Tuesday.
"The housing downturn and correction, whatever you want to call it, and factors related to that downturn have continued to drive industry performance," said John Reich, the regulator's director.
Savings and loans added a record $7.6 billion in the first quarter to their provisions for loan losses, a 38% increase from the $5.5 billion set aside in the previous quarter, the agency reported.
In delivering the quarterly report, Reich said his agency's powers should be expanded to include oversight of mortgage bankers and brokers, opposing a Treasury Department call to eliminate the office.
He said the agency was developing a proposal to advance the plan.
"There needs to be a federal supervisor of the entire mortgage industry," Reich said. "We have 1,000 people spread around the country. We know this business."
Reich has defended the agency since March, when Treasury Secretary Henry M. Paulson Jr. proposed merging it into the Office of the Comptroller of the Currency.
Formed in 1989 after the savings and loan crisis, the thrift regulator oversees 831 companies, including Countrywide Financial Corp. in Calabasas, which Bank of America Corp. is buying after mounting defaults led to concern the mortgage lender would face bankruptcy.
To merge the two agencies "and not have a regulatory agency that has as its primary focus mortgage finance and housing seems to be counterintuitive and contrary to how we ought to be responding to the current housing correction," Reich said.
The thrift regulator said delinquencies for most types of loans rose in the first quarter. Troubled assets -- loans that are 90 days or more overdue and repossessed assets -- amounted to 2.06% of thrift industry assets, up from 1.66% in the fourth quarter.
The industry made a total of $133.7 billion in mortgage loans in the first quarter, down 20% from $166.6 billion in the previous quarter. "I'm reluctant to predict when we will see a substantial return to profitability," Reich said. "I think we're on the verge."