Gonzalez Decries Secrecy Of Meeting on Exam Rules

WASHINGTON -- House Banking Committee Chairman Henry B. Gonzalez has denounced a decision by bank and thrift regulators to meet behind closed doors to discuss examination guidelines aimed at easing the credit crunch.

The meeting in Baltimore next week with more than 450 of the most senior federal examiners "does not involve national security issues," Rep. Gonzalez, D-Tex., wrote in a strongly worded letter to T. Timothy Ryan, director of the Office of Thrift Supervision. The OTS is coordinating the conference.

Worrisome Precedents

Rep. Gonzalez warned of the appearance of "some extralegal plan to change the examination and supervision of depository institutions.

"Too often in the past, we have learned of regulatory machinations - such as the savings and loan forbearance of the 1980s - after the fact and after billions of dollars of insurance and tax funds were lost."

Rep. Gonzalez has previously expressed concern that the administration's effort to spur new bank lending could lead to additional losses for the insurance fund that will ultimately make taxpayer assistance necessary.

On Wednesday, Comptroller General Charles A. Bowsher expressed a similar concern, saying that his agency would be watching the Baltimore meeting closely. Mr. Bowsher said his office tried to gain access to the proceedings but had been rebuffed.

A spokesman for Mr. Ryan described the two-day meeting that begins on Monday as "a working session" with discussion of case studies. In a letter to Rep. Gonzalez, Mr. Ryan suggested that outside observers would inhibit the "frank and open discussions" he is trying to promote.

A two-hour opening session, featuring speeches by Treasury Secretary Nicholas Brady, deputy Treasury Secretary John Robson, and others will be open to the press and other interested persons, said OTS spokesman Robert Schmermund.

Mr. Schmermund added that hotel facilities being used for the conference are stretched thin and could not accommodate extra attendees in the rooms reserved for smaller "breakout" sessions.

But Jake Lewis, a spokesman for Rep. Gonzalez, ridiculed the notion of a space was a problem, saying, "Our person would be happy to sit on a camp stool."

Mr. Lewis called the two-day meeting an important policy session appropriate for the banking committee, which has oversight responsibility for the regulatory agencies.

The Baltimore meeting is one result of initiatives announced by the Bush administration in early October to encourage bank lending.

Beyond Market Value

On Nov. 7, the four bank and thrift agencies issued guidelines directing examiners to consider the long-term prospects for properties serving as collateral for loans, rather than just their current market value. They also called for an appeals process for banks that disagree with their examiners.

Mr. Brady acknowledged on Thursday that the guidelines have not been "well received by the regulatory community, but that's what we are doing."

He said the administration hopes to sensitize examiners to the problems that financial institutions have encountered as real estate markets soften.

PHOTO : Rep. Henry Gonzalez Feas, "extralegal plan"

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.