WASHINGTON - Veteran regulator John F. Downey has moved into the second-in-command post at the Office of Thrift Supervision.

Known as a straight shooter with a good sense of humor, Mr. Downey fills the newly created position of director of supervision, with roughly three- quarters of the agency's staff reporting to him.

In an internal reorganization announced this month, the agency put Mr. Downey - previously the deputy director for regional operations - in charge of his old department along with four additional agency divisions: accounting, compliance policy, corporate activities, and supervisory policy.

Mr. Downey, 57, is known as one of acting director Jonathan L. Fiechter's confidants. Years ago, both worked at the Office of the Comptroller of the Currency before joining the OTS' predecessor agency, the Federal Home Loan Bank Board.

"We seem to work pretty well together," Mr. Downey said of his boss. "He lets me make the easy decisions, and he makes the hard ones." Mr. Downey is well respected by the agency's staff, current and former OTS officials said.

When his colleagues dive too deeply into regulatory mumbo-jumbo, Mr. Downey is famous for rolling his eyes and bringing people back to Earth with a chuckle, one said.

Mr. Fiechter and Mr. Downey accidentally entertained a number of their colleagues at a private party last summer at a Virginia lake. Mr. Downey was captaining a pontoon boat when Mr. Fiechter tried his hand at sailing.

As the acting director's small catamaran began to sink in the middle of the lake, Mr. Downey guided his pontoon out to the rescue. But his boat also flooded, as other staffers roared with laughter on the shore, joking that "our leaders are sinking," as one recalled.

On a more serious note, Mr. Fiechter said Mr. Downey, "has broad experience in all areas of financial institution supervision and regulation, and is a strong administrator as well. He has the respect of his colleagues at OTS and of the industry we regulate."

The thrift trade group agrees.

"He is not a cheerleader for the industry, but he is willing to listen to industry concerns," said Robert Schmermund, a former OTS spokesman who is now director of public affairs for the Savings and Community Bankers of America. "He is the epitome of rational and reasonable regulation."

In his new capacity at the OTS, Mr. Downey plans to streamline the corporate applications process. Over the next month, he will begin eliminating some layers of approval for mergers, branching applications, mutual-to-stock conversions, and other applications.

He will ask various agency departments to use a team approach to give thrifts faster answers.

In addition, he said he plans to closely monitor the industry's levels of interest rate risk.

Also this year, the OTS will be revising the way it does compliance exams, Mr. Downey said. When bank and thrift regulators agree on new Community Reinvestment Act rules, he will be in charge of implementing the changes.

Mr. Downey will direct the agency's newly mandated customer service program, which includes adding an ombudsman to hear thrifts' complaints.

He also will play a part in the agency's continuing downsizing efforts.

"There are probably going to be close to 200 positions eliminated in 1995, both in the regions and here in Washington," Mr. Downey said.

While the new director of supervision generally wins high marks from his colleagues, one OTS staffer said Mr. Downey has a stubborn side.

For instance, earlier this month Mr. Downey overruled his staff's recommendation to allow several institutions that recently went public to buy back more of their stock.

His refusal set off a barrage of criticism on Wall Street.

Nick Adams, portfolio manager of the First Financial Fund, a closed-end mutual fund, said Mr. Downey's decision takes "away one of their best alternative investments ... driving the thrifts into more unsound and unsafe investment alternatives."

Mr. Downey said he is aware of investors' wrath.

"They got a full-court press on me," he said. But he wanted to hold the thrifts' feet to the fire. The thrifts had told the OTS that they wanted to go public to raise money to expand and enter new businesses - not to buy back stock.

"It makes little sense right after they do that, that they change their mind," said Mr. Downey. But most stock buybacks immediately after mutuals go public "really benefit the insiders," he said.

Still, he added, "I am not opposed to all stock repurchases."

Friends say Mr. Downey likes being called "the chief," a nickname taken from his days as the OCC's chief examiner.

He worked for the OCC for 19 years before joining the Federal Home Loan Bank Board in 1986. He was deputy comptroller and chief national bank examiner for the OCC when he left for the OTS' predecessor agency.

At the bank board, Mr. Downey was the chief federal thrift regulator for the Indianapolis district, acting as executive vice president and director of agency functions for the Federal Home Loan Bank of Indianapolis.

In August 1990, he came to Washington as the deputy director for regional operations, overseeing the agency's five regional offices.

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