State-Thrift Regulation Battle Shifts to Congress: Legislation Introduced by Bank Board Would Curtail a Wide Range of State-Granted Powers

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WASHINGTON -- For more than a year, Frederal Home Loan Bank Board Chairman Edwin J. Gray has sought to rein in high-flying state-chartered thrifts with regulations that restrict the activities of all federally insured savings and loans.

And for more than a year, state thrifts and their regulators have leveled complaints at Mr. Gray, in some cases threatening to go to court.

Now the front in that battle is shifting to Congress -- and picking up in intensity.

On May 3, the Bank Board sent to Congress legislation that would bar state-chartered federally insured thrifts from any activity not open to federal institutions. If passed, the legislation would substantially curtail a wide range of powers, such as real estate and commercial lending, that numerous states have granted their thrifts, industry analysts say.

The proposed legislation also would require the Federal Savings and Loan …