The Office of Thrift Supervision is cutting loan documentation requirements and relaxing commercial lending limits for the savings institutions it regulates.
In a proposal published in Wednesday's Federal Register, the agency explains its plans to cut by 60% the number of federal code pages devoted to thrift lending and investment.
Many of the changes deal with redundancies and out-of-date rules. But the OTS is also trying, within the sometimes narrow confines of the law, to give thrifts more flexibility in making loan decisions.
"By getting away from cookie cutter and one-size-fits-all regulations, we're giving thrifts more flexibility to tailor their operations to better meet the needs of their customers," said John Downey, the agency's executive director of supervision.
The proposed OTS regulation would:
*Replace a four-page list of documents a thrift must have before it can make a loan with one paragraph of general safety and soundness standards.
*Exempt commercial loans made by a thrift service corporation from the thrift's overall 10% limit on commercial loans.
*Let thrifts use their own cost-of-funds indexes in structuring adjustable-rate mortgages.
*Remove the 35%-of-assets limit on credit card lending, although the qualified thrift lender test won't allow credit card business to grow beyond 45%.
*Remove loan-to-value limits and other specific standards for manufactured housing loans.
The new regulation also would consolidate in one place OTS lending and investment rules, now found in different parts of the Code of Federal Regulations.
It does not, however, affect rules dealing with loans to one borrower, capital, and appraisals adopted in the wake of the thrift crisis. "We're not touching them," said Deborah Dakin, OTS assistant chief counsel for regulations and legislation.
Also out of the agency's reach are limits set by Congress on the percentage of assets thrifts can dedicate to consumer loans, commercial loans, general leasing, commercial real estate loans, commercial paper, and education loans. Mr. Downey said the OTS has no plans to propose legislation to relax these limits.
The rewrite of lending regulations, which will be out for comment until April 16, is part of a review of the entire OTS rulebook.
In recent weeks the agency has adopted final regulations cutting redundancies throughout its rules and reducing the size of the quarterly thrift financial report. Proposals on other sections of the rulebook are due in the coming months.
Mr. Downey said the OTS is trying to make its rulebook look more like those of the bank regulatory agencies, which have long left many details to examiners' handbooks and individual discretion.
"In the past there was a regulation for everything," he said. "I came across in 1986 from the Office of the Comptroller of the Currency, and I think there were three times as many regulations (here) as at the OCC."
The Comptroller's office is in the midst of a similar review of its rules, and the Federal Deposit Insurance Corp. is about to embark on one.
