U.S. Seeks to Curb Mutual Savings Bank Deals

By Bradsher, Keith | THE JOURNAL RECORD, January 28, 1994 | Go to article overview

U.S. Seeks to Curb Mutual Savings Bank Deals


Bradsher, Keith, THE JOURNAL RECORD


By Keith Bradsher

N.Y. Times News Service

WASHINGTON _ Federal regulators and lawmakers have moved to stop the reaping of huge profits by executives and trustees when mutual savings and loans sell stock to the public or merge with commercial banks.

The Federal Deposit Insurance Corp. said Wednesday that it would draft rules to protect depositors at mutual institutions that sell stock, as Green Point Savings Bank in Queens is trying to do.

A federal district judge Wednesday temporarily put on hold Green Point's efforts to sell stock this week, saying that a suit against the bank by depositors may have merit.

In the executive branch, a Treasury Department official said that his agency was moving to halt action on all requests by mutual savings and loans to sell their institutions to commercial banks.

"We will certainly stop processing them today," said Jonathan L. Fiechter, the acting director of the department's Office of Thrift Supervision. But he then stopped in midsentence and said that no formal decision for a moratorium had been made. Fiechter made his comments to reporters after testifying before a congressional panel.

The Democratic chairman and the ranking Republican on the Senate Banking Committee introduced legislation Wednesday that would restrict executive compensation in all sales of mutual institutions, which are owned by depositors.

The legislation offered by Donald Riegle, D-Mich., who heads the committee, and Alfonse M. D'Amato, R-N.Y., would ban the granting of most stock options and would impose other limits. They said their move was needed to prevent abuses by insiders that shortchange depositors.

Legislation that would impose less stringent limits has already been introduced in the House by the Democratic and Republican leaders of the House Banking Committee.

Fiechter told the House Banking Committee's panel on financial institutions that prompt federal action is needed because hundreds of mutual savings and loans have been sold in recent years, often enriching their directors and executives, but not the depositors who technically own the institutions.

"We had 2,000 mutuals, now we're down to 800," Fiechter said. "If we study this for two years, there won't be any mutuals left."

With $250 billion in assets, mutual savings and loans make up about a quarter of the nation's savings and loan industry, and hold 5 percent of the entire American banking and savings industry's assets.

Last year alone, 111 mutual savings and loans in the United States ceased to be owned by their depositors, including 29 bought by banks, according to figures compiled by SNL Securities L.P., a brokerage firm in Charlottesville, Va. The rest sold stock, as Green Point is trying to do, or created a parent company and sold some stock in it.

It is unclear how many potential deals would be affected by any moratorium.

The issue of whether executives and trustees are profiting unreasonably from such transactions has been highlighted by the case of Green Point, based in Flushing, Queens.

The bank had originally won the approval of the New York State Banking Department for a plan to sell stock to the public, with provisions that would give its officers and directors large blocks of stock and options. Many other mutuals had rewarded their executives and directors in a similar manner.

The planned stock sale took a twist when the Republic Bank of New York made an unusual counter-offer to buy Green Point that included cash payments to depositors. Only after that did the state banking department balk and attention began to be focused on the generous compensation.

If Green Point stock had doubled after being issued _ paralleling the experience of other mutuals _ the stock and options that would have been granted to 16 officers and trustees would have been worth an estimated $85 million. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

U.S. Seeks to Curb Mutual Savings Bank Deals
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.