The Office of Thrift Supervision is taking roughly 14 months-or more than twice as long as usual-to process all but plain-vanilla charter applications.

To reduce applicants' expectations, OTS Deputy Director Richard M. Riccobono told the agency's five regional directors last month to inform companies that the six-month processing standard is no longer realistic.

A lot of applicants were becoming frustrated at not getting their charters after six months, Mr. Riccobono said in an interview. "We haven't been giving them the proper expectations."

But lawyers charge the agency with deliberately dragging its feet for fear of offending lawmakers who are considering limiting ownership of thrifts to financial companies.

"I have the sense that there's just an innate caution" at the agency, said Ira L. Tannenbaum, a partner in the Kirkpatrick & Lockhart law firm in Washington. The delays, he said, "don't seem justifiable."

"They've gone out of their way to make it difficult," said another thrift lawyer who refused to be named. "I don't think it's the complexity of the applications. I think it's the agency. They're deathly afraid of being seen by folks on the Hill as helping these companies out."

And Capitol Hill may not be the only source of concern.

Treasury Secretary Robert E. Rubin supports a proposed legislative ban on thrift ownership by nonfinancial firms. OTS Director Ellen Seidman disagrees, which means she is essentially opposing her boss because the agency is a division of the Treasury.

Mr. Riccobono flatly denied that the delays are politically motivated. "That's just not true," he said. "That's somebody's imagination gone wild. These things are being done very carefully."

According to Mr. Riccobono, thrift applications are taking longer to process because the requests are more complicated, require extensive safety and soundness reviews, and envision significant use of the Internet to deliver services.

For example, some applicants plan to incorporate existing business units, such as mortgage lenders, into the thrift. Others want the thrift to transact business with affiliated companies. Both scenarios require examiners to review the existing businesses before a charter is granted, he said.

The OTS also needs more time to determine whether the cross-marketing of banking products among affiliates raises safety-and-soundness issues, he said.

Several applicants also want to operate almost exclusively on-line, a realm the agency is approaching cautiously because it has little experience of regulating Internet-based institutions, he said.

Finally, a significant number of applicants are submitting incomplete business plans. This means the agency must wait for the applicants to submit additional data, he said.

In recent years, a flood of companies ranging from insurance and securities firms to casket makers and supermarket chains have sought to own thrifts, which - unlike national banks- may be owned by commercial firms.

Demand for charters has soared in recent years as Congress began debating whether to limit thrift ownership to financial companies. In 1998, the agency received 89 applications for thrift charters, a 60% increase from 1997. So far this year, 18 charter applications have been filed. Currently, 48 nonbanking companies have applications pending.

However, while Ms. Seidman has repeatedly argued that a thrift charter is not a loophole in the legal wall separating commerce from banking, the agency has acted on only a small number of nonbank applications.

Of 74 applications by nonbanks in the last three years, only 16 charters have been awarded, according to the OTS.

The agency, like the rest of the government, is straining to keep up with the regulatory demands of the year-2000 computer glitch, but Mr. Riccobono insisted he has sufficient staff. (Since the industry collapsed in the 1980s, the OTS has reduced its work force by 57%, or roughly 1,700 people.)

"It's not a lack of resources," he said. "The only thing that slows these things down are issues. I don't think bringing more people brings us quicker to a decision point."

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