Split on Charter Surprised Calif. Thrifts

To the Editor:

I am writing to correct several impressions that may inadvertently have been left by your April 23 article on California state savings bank charter legislation ("Setback for California Thrifts: Bid for New Charter Derailed," page 6).

The article suggests that the state of relations between the California Bankers Association and the Western League of Savings Institutions is adversarial, when in fact just the opposite is true. As CBA president Bill Reid says in the article, we do cooperate on a number of issues. Credit union questions, Federal Home Loan Bank policy, and natural disaster legislation are areas where we are working together right now and have virtually no differences.

The article does correctly point out we are divided on the charter issue. We were surprised that the bankers association decided to oppose the creation of a state savings bank charter for California thrifts, a charter which virtually all other thrift states provide and which would mirror the federal charter that most of our members have now.

To be sure, the thrift charter is one that has been debated vigorously this year in Washington. But the present state of play on this issue suggests that the fight on the charter itself is over, even if there is disagreement on holding company issues.

Since holding company issues are largely federal, we did not expect the CBA to oppose in Sacramento what seems to us to be a benign piece of legislation. Neither did Assembly Banking and Finance Committee Chairman Lou Papan, who introduced the measure as a "committee bill," meaning that it had no significant opposition. Thus when CBA opposition surfaced, he had no choice other than to pull the bill from consideration this year.

Your article also cites sources at the bankers association as suggesting that the proposed state savings bank charter violates some "agreement between the two industries to phase out the thrift charter if and when the two insurance funds are merged." If the league entered into such an agreement-indeed if any thrift group has agreed to defer a funds merger until our charter has been obliterated-I have missed it.

The CBA and other commercial banker groups do bitterly oppose a funds merger as long as separate charters exist, but we continue to believe that a merger of the Bank Insurance Fund and the Savings Association Insurance Fund is sound public policy. Besides, if this were all the CBA found objectionable, why not simply have conditioned nonopposition to a state savings bank charter on SAIF insurance for converting thrifts?

Mr. Reid is also correct that our respective members would benefit from the opportunity to participate in programs and services offered by both our organizations. In addition, throughout 1997 the league and the bankers association attempted to negotiate a merger. But the issue always came down to bankers being unwilling to accept our differences.

Your article quotes CBA spokesman John Stafford as saying his organization "would like to see the two kinds of institutions have a single charter going forward." If we are "two kinds of institutions" why must thrifts be "bankified" before we can be accepted?

Many thrifts would like to join the club, but they want to walk in the front door and get Saturday and Sunday tee-off times. And they want to walk in as thrifts.

Louis H. Nevins

President, Western League of Savings Institutions

El Segundo, Calif.

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