As a rush of nonbanking firms seek permission to launch thrift subsidiaries, Diana Garmus and Dwight Smith are guarding the regulatory floodgates.

The two officials, who oversee incoming applications at the Office of Thrift Supervision, say they have never been busier. Thirty-three requests for charters are pending, 21 from nonbank companies.

"There's been a mad dash to get a thrift charter, and it's our job to make sure these companies don't add new risks to the banking system," said Ms. Garmus, director of corporate activities.

Since October, the OTS has granted thrift charters to five nonbanks, including Travelers Group, Reliastar Financial Corp., and Excel Communications Inc.

With her staff of 30 analysts, Ms. Garmus dissects the business plans submitted with each application to make sure the new thrifts will operate safely.

Mr. Smith, deputy general counsel for business transactions, works with 10 other lawyers to ensure applications comply with the intricate legal requirements involved in operating a federally insured depository institution.

For the big insurance and securities firms, that means taking a close look at how transactions will be conducted between a thrift and its nonbank affiliates. Those relationships must be "arm's-length," and the companies must disclose any cross-marketing plans.

"Because of the size of the institutions we're dealing with, this can be one of the biggest issues," said Mr. Smith. "The rules regarding extension of credit and other transactions with affiliates are very complex."

Mr. Smith, formerly a lawyer at Covington & Burling here, joined the OTS in 1990 and has been in his current post since 1995.

The rush to launch thrifts-sparked largely by congressional efforts to eliminate the S&L charter-has resulted in some haphazard legal work, according to Ms. Garmus. In their effort to get requests to the OTS quickly, companies sometimes omit critical parts of applications.

"Sometimes we'll get them without business plans," she said, "in which case we send them back."

Determining Community Reinvestment Act obligations is another thorny issue. Generally, the OTS is trying to build enough leeway into each approval that CRA obligations can be expanded as the thrift grows.

"Companies must lend in the communities where they are doing business, but a lot of times they don't know what direction their thrifts will take until they roll them out," said Ms. Garmus. "It may be that their CRA obligations are scattered all over the map or concentrated in one area."

Matthew Lee, executive director of Inner City Press/Community on the Move, praised Ms. Garmus for her "hands-on" approach. "Some agencies 'ghettoize' CRA, and the big shots don't reach out to groups like ours. But Diana has been very involved and takes it seriously."

Ms. Garmus started her career as an examiner in the San Francisco office of the now-defunct Federal Home Loan Bank Board. She has held a variety of posts since coming to Washington 12 years ago, including a stint as executive assistant to former OTS acting Director Jonathan Fiechter. She was named to her current post in 1991.

Ms. Garmus said today's heavy work load is rivaled only by the financial triage needed in the S&L crisis. "This is a lot nicer, though, because we are helping to build an industry, not just stop the bleeding."

Though Ms. Garmus and Mr. Smith generally get high marks from industry lawyers who file the applications, a few have complained that approvals are getting bogged down. "They are incredibly overworked, and it's showing," said a lawyer who asked not to be named. "Also, they are looking under every rock for a potential problem."

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