Newspaper article THE JOURNAL RECORD

Home Loan Bank Board Won't Be 'Cozy' / Syas Regulator

Newspaper article THE JOURNAL RECORD

Home Loan Bank Board Won't Be 'Cozy' / Syas Regulator

Article excerpt

WASHINGTON - M. Danny Wall, the new top federal regulator of the nation's savings and loan institutions, says the perception that his agency is too cozy with the industry won't last long under his tenure.

``It will not be possible for us to preserve, even if we wanted to, the perception of being close to the industry, and clearly we don't want to,'' Wall said after watching President Reagan sign comprehensive banking legislation at an Oval Office ceremony.

The Competitive Equality Banking Act pumps $10.8 billion over the next three years into the depleted Federal Savings and Loan Insurance Corp., which insures deposits in 3,200 S&Ls.

The FSLIC is an arm of Wall's agency, the Federal Home Loan Bank Board, and must deal with more than 400 bankrupt S&Ls that regulators have been forced to keep open because they lacked the money to pay off depositors.

When those S&Ls start to close or merge with healthier institutions, the perception - justified or unjustified - that the board is unduly influenced by the industry it regulates won't last, Wall said in an interview.

``We're going to have to put to rest institutions that have been managed by people who have been popular in the industry.. . .They're going to have a lot of supporters who are going to be very upset with us. That will happen, no question,'' he said.

And, because bank regulators often turn up evidence used by U.S. attorneys to bring fraud indictments, ``we will be involved in the process of putting people in jail. That's not popular,'' he said.

The failing institutions have been losing $10 million a day and the problems have drained FSLIC's resources from $6 billion two years ago to a deficit of $6 billion, according to a congressional audit.

The $10.8 billion infusion is being raised by selling 30-year, government-guaranteed bonds. They will be paid off by healthy S&Ls through insurance premiums. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.