Magazine article American Banker

S&L Reregulation Urged to Rout out Industry's 'Bums.' (Anthony Frank of First Nationwide)

Magazine article American Banker

S&L Reregulation Urged to Rout out Industry's 'Bums.' (Anthony Frank of First Nationwide)

Article excerpt

MIAMI -- The chairman of the First Nationwide Savings & Loan Association has issued a plea for limited reregulation of the S&L industry to force out the "bums" who are eroding public confidence in it.

Anthony Frank told the annual meeting of the Florida League of Savings Institutions in Palm Beach on Tuesday that there are many "mini-Knapps" around.

He was referring to Charles Knapp, the chairman of the Financial Corporation of America who resigned under pressure when federal regulators questioned his company's accounting methods. Mr. Frank has been an outspoken opponent of Mr. Knapp's strategy of rapid growth while betting on the future direction of interest rates.

The First Nationwide chairman noted that an increasing number of S&L chief executives are using similar "gambling" strategies, figuring that "heads they wind, and tails, they aren't risking much anyway" because federal deposit insurance will cover them.

"These people are fouling our nests," Mr. Frank said.

He suggested that one way to discourage such activity would be to force those institutions with riskier strategies to pay more for federal deposit insurance. As it is, he said, "the solid institutions are paying for the gamblers.

"It is like Prudential Life Insurance charging the same premium to Barney Clark and Bruce Jenner."

He also said he supports a limit on the use of brokered deposits to "stop people from growing at 1000% a year." And he would like to see stricter net worth requirements and investment limitations. …

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