ORLANDO - A senior official of the Federal Deposit Insurance Corp. chided bankers over their dealings with the agency during mutual fund bailouts earlier this year.
In a presentation at the Bank Securities Association conference here last week, the FDIC's associate director of supervision policy, Robert F. Miailovich, said regulators were not pleased that many of the banking companies that bailed out money market mutual funds failed to notify the agency.
"On most of them, we read about them in the newspaper," he said, without mentioning any banks by name.
At least seven banking companies are known to have bailed out money market funds, including BankAmerica Corp., Fleet Financial Group, and Barnett Banks Inc.
In an interview, Mr. Miailovich said banking companies were not required by law to notify the FDIC of mutual fund bailouts. But he said the agency expected it its as a courtesy.
Mr. Miailovich said in his presentation that these bailouts raise sensitive questions. For example, there are restrictions on financial transactions between banks and bank-affiliated investment advisers. While these restrictions don't apply to bank holding companies, their existence means that mutual fund bailouts must be carefully structured.
Additionally Mr. Miailovich said, the FDIC needs "to put the kibosh" on the assumption that just because some bailouts are acceptable to banking regulators, that all would be.
The agency's concern is that small bailouts like those earlier this year could set a legal precedent for investors to demand bailouts for much larger losses.
Mr. Miailovich, speaking during a panel discussion, also warned banks to be aware of the negative reaction to using lists of bank customers with expiring certificates of deposits for marketing purposes.
Mr. Miailovich said no laws prohibit this. But he and a fellow panelist, Washington attorney Robert M. Kurucza, warned bankers that many people, including congressmen, had assumed that this type of financial information was confidential.
Mr. Miailovich and Mr. Kurucza, a partner with Morrison & Foerster, said consumers and lawmakers were unhappy to learn that they were mistaken.
Mr. Miailovich added that personally he has found the calls to be an annoyance.
"I get the darndest calls when my CDs mature," he said. "They're not good calls."
In his speech Mr. Miailovich also gave further information about the FDIC's controversial plans "mystery shop" a portion of the roughly 2,000 banks that sell investment products.
The reviews, which were announced earlier this year, are scheduled to start in December and take several months to complete, Mr. Miailovich said.
Mr. Miailovich also offered conferees some insights into the FDIC's new chairman, Ricki R. Tigert.
Although she has been at the helm for just under two months, Ms. Tigert has already made a distinct impression on staff.
"She's a very dynamic leader who has taken the reins with great firmness," Mr. Miailovich said.
And her approach to the job? "She's a bit of a micromanager," he said, suggesting that matters including banks' investment products sales will receive close attention.
In a luncheon address at the conference, Richard S. Carnell, the treasury department's assistant secretary for financial institutions, urged attendees to join the Clinton administration in trying to reform the Glass-Steagall Act, which puts limitations on banks' securities activities.
Mr. Carnell said the Clinton administration believed "there are better ways to achieve the objectives of Glass-Steagall without drawing a line in the sand divorcing investment banking from commercial banking."
But prospects for reform are hard to judge, he added. On one hand, members of Congress elected since 1988 seem to be less supportive of the act than their predecessors, he said.
On the other hand, the Republican party's aggressive legislative agenda could push Glass-Steagall reform to the back burner.