The merger of the Office of the Comptroller of the Currency and Office of Thrift Supervision is shaping up to be the match made in regulatory hell.
Three months after the regulatory reform bill ordered the OTS' elimination over the next year, efforts to bring the agency into the OCC fold have been plagued with bitterness, communication problems, unease on job placement and rampant conflicts. The latter range from the important to inane, covering everything from job titles to claims of unreturned phone calls to bickering over the placement of booths at an upcoming industry conference.
The fights go all the way to the top, with several sources suggesting acting OTS Director John Bowman is openly hostile to the merger and accusing him of being uncooperative.
"It's a little like the Middle East — the feud goes back so far it's hard to determine who threw the first stone." said Kip Weissman, a partner at Luse Gorman. "Both sides need to grow up a little bit and stop the personal attacks — there are plenty of difficult technical issues which need to be resolved."
In interviews with current and former officials from both agencies, the primary conflict stems from different views of the merger. OTS officials see the agencies' combination as a merger of equals and are frustrated at what they view as high-handed tactics by OCC officials who do not share that view. OCC officials, meanwhile, are frustrated by what they claim is a lack of cooperation from the OTS in efforts to coordinate activities of the two agencies and set a consistent agenda and tone.
The Dodd-Frank law abolishes the OTS but gives it time to wind down its operations and merge its functions into the OCC and Federal Reserve Board. As of July 21, 2011, the agency will formally transfer its authority over thrift holding companies to the Fed while the OCC will then supervise all federal thrifts. The OTS officially dissolves 90 days later.
While the tensions between the OTS and OCC are long-standing, the merger appears to have exacerbated them rather than putting them to rest. Although most agency officials did not want to publicly talk about the problems, it is no secret to outside industry observers, with several saying they understand the OTS is going into the merger "kicking and screaming.
