The Dodd-Frank bill has "eroded" the benefits of the federal thrift charter and it's unclear if existing institutions will "prosper" under the supervision of the Office of Comptroller of the Currency, according to the current thrift regulator.
Office of Thrift Supervision acting director John Bowman noted that state regulators are trying to persuade thrift managers to convert to a state bank charter.
"Only time will tell how many OTS-regulated thrifts choose state supervision over the OCC, or decide to stay with OCC, but eventually abandon their thrift charters in favor of national bank charters," Bowman said at an international financial conference in Tokyo.
The Dodd-Frank bill moves supervision of thrifts to OCC by July 2011 and abolishes OTS. This is creating an "additional layer of anxiety and uncertainty about what the future will be like without a dedicated thrift regulator," the OTS acting director said.
The financial services reform measure curtails federal preemption previously exercised by thrift and national bank regulators. The law also transfers responsibility for regulation of thrift holding companies to the Federal Reserve Board and maintains existing limitations on commercial and small business lending by thrifts.
"So with the benefits of the thrift charter significantly decreased and its limitations retained, how attractive will the charter be for today's financial services enterprises? Again, only time will tell," Bowman said.
There are currently 750 OTS-supervised thrifts with $930 billion in assets. In the 1980s there were roughly 3,000 thrifts in existence.
At yearend 2007, before the failures of mega-thrifts Countrywide, IndyMac and Washington Mutual, 827 lenders with $1.5 trillion in assets had thrift charters.
