A few years ago, the Office of Thrift Supervision was on life support. It was regulating an industry that was sharply consolidating, which devastated the agency's budget.

What's worse, nobody liked the OTS.

Other regulators questioned its competence. Members of Congress charged that the agency either was too harsh on thrifts or wasn't closing them down fast enough. The industry wanted to be regulated by anyone but the OTS; dozens of thrifts converted to state savings banks to escape its reach.

Every few months, it seemed, there were proposals to kill the OTS and trundle off its supervisory duties to some other agency. To paraphrase Mark Twain, the rumors of OTS' demise were greatly exaggerated.

Today, the thrift industry is blooming with health.

The agency's critics no longer lobby for its extinction.

And after years of floating proposals to eliminate the agency, Congress isn't paying attention. Legislators have their hands full just trying to fix the Savings Association Insurance Fund. Dealing with the OTS will be put off until at least next year.

So the OTS is alive and taking in stride its most recent trauma, the departure of acting Director Jonathan L. Fiechter, widely credited with steering the agency wisely during four tumultuous years.

Some had expected that Mr. Fiechter would leave quietly and would be succeeded by John Downey, an agency veteran who could look after the OTS until the inevitable occurred and it was merged into another regulatory agency, most likely the Office of Comptroller of the Currency.

But that hasn't happened. The Treasury Department is searching for a permanent director. Mr. Fiechter, set to join the World Bank on Sept. 4, delayed his departure until Oct. 7 to give the Treasury more time to find his replacement. Naming a permanent director should give the agency some certainty, he said.

And, Mr. Fiechter said, it's becoming increasingly clear that the thrift industry has a future, in one form or another.

"I don't see why there can't be specialized housing lenders and a specialized regulatory agency for the next 20 years," Mr. Fiechter said, adding that specialized regulation could continue even if OTS is merged with another agency.

In some ways, OTS is a leader among the regulatory agencies.

It has shifted course from closing errant institutions to helping healthy thrifts improve. It has cut its staff in half and pulled its budget into balance. After years of downsizing, "we're reviewing hiring plans for the future," Mr. Fiechter said. What's more, OTS has taken the lead on regulatory reform, aiming to revamp 70% of its rules by yearend.

Thrifts now like the agency, and though they don't oppose a merger, particularly if it saves money, they also don't want to lose the essence of the agency - its employees.

"The industry's view now is that of all the regulators, the OTS has taken the call for reducing regulations very seriously," said Robert Schmermund, director of communications for America's Community Bankers.

"The industry appreciates the talent that remains at OTS," he added. "We would hate to see that expertise and experience disappear."

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