Turmoil, Rumor at Agencies; More Cuts at OTS

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A week after news reports pressured the Office of Thrift Supervision to confirm plans for significant layoffs, the agency has stubbornly refused to say exactly how many jobs will be purged -- even as employees and industry observers criticize Director James Gilleran's handling of the affair.

The agency said that it began a wave of cuts at its five regional offices in mid-March, including firing 43 employees in Chicago and 60 examiners elsewhere. Sources inside and outside the agency say there are plans to fire 20% of its 1,165 staff members.

OTS officials have refused to disclose an overall figure, and they defended the agency's decision not to share more information at this time by saying employees need to be informed first.

The lack of disclosure "was not intended to be obstructionist," but an effort to "make sure that folks affected ... would be the first folks that know," agency spokesman Kevin Petrasic said Wednesday.

But the OTS' efforts appear to have done more harm than good, especially among employees who said they were surprised to hear of the cutbacks, and are now in turmoil waiting to see who will be let go.

"I think there will be a lot of bitterness in the way this is being done," one OTS employee said. "They haven't released any facts to the staff at all."

The furor over the cuts even sparked a memo Tuesday from Comptroller of the Currency John D. Hawke Jr., who rushed to tell his own employees that he was not considering eliminating district offices or slashing personnel.

In Mr. Hawke's memo, which was obtained by American Banker Wednesday, Mr. Hawke acknowledged that the OTS cuts have spurred more talk of combining the two agencies -- and denied that such a move was in the works.

"It's understandable that the news about the actions at OTS might raise questions about that agency's future," Mr. Hawke wrote. "I know from our personal conversations that OTS Director Jim Gilleran is committed to restoring his agency to full budgetary health, and he is certainly not looking to merge OTS out of existence ... I wish Director Gilleran the best of good luck in working through the challenges at OTS, and I am not promoting and do not favor a merger of OCC and OTS."

Mr. Hawke said that he had commissioned a study of the functions being performed in the agency's district offices, but denied there was a master plan to close offices.

"Our district office study was initiated with no preconceived results in mind, and no one is in an position today to say what the outcome of the study will be," he wrote. "It's far too early to say what changes may result from that study, but at a minimum we will develop a much better informed understanding of how efficiently we are operating."

The OTS has eliminated the Central region office in Chicago, though officials said the agency will maintain a smaller office there. At least 43 staff members in Chicago were told they were fired at a staff meeting two weeks ago, the agency confirmed, though one source said that 22 additional employees have been cut elsewhere in the region. Sources said more employees in the San Francisco office were laid off, but there were no reliable estimates.

The agency has picked curious fights about what information it wants to release. For example, a spokesman refused for several days to say how many employees were at the Chicago office before the cuts there -- information that is usually given out freely. The other banking agencies -- the comptroller's office, the Federal Reserve Board, and the Federal Deposit Insurance Corp. …