WASHINGTON - The Office of Thrift Supervision plans to scale back a proposal to more closely monitor holding companies, but opponents of the proposal said there was nothing the agency could do to sway them short of pulling the plug.
"I do not think it is going to be capable of being revised to a level that will be welcomed with open arms by the industry," said Gilbert T. Schwartz, a partner in the Washington law firm of Schwartz & Ballen who has clients that claim the plan is overly meddlesome.
OTS Director Ellen Seidman, who has been inundated with complaints since she unveiled the proposal in late October, said in a speech Wednesday to the Exchequer Club that changes were forthcoming. She hinted that the agency intends to narrow the types of holding companies and transactions that would be subject to closer scrutiny, but conceded that no decisions have been made.
"Potential solutions remain a little vague and undeveloped," she said.
Under the proposal, holding companies would have to give examiners 30-days notice before significantly increasing debt, slashing capital, or making major acquisitions. Comments are due Feb. 9.
Stuart G. Stein, a partner in Washington with the law firm Hogan & Hartson LLP who also represents thrift owners, said this "major shift in holding company philosophy" was prompted by agency concerns about the impact that parent companies' expanded nonbanking activities may have on subsidiary thrifts. In recent years department store chains, insurance companies, and other nonbanks have obtained thrift charters.
Agency officials have given varying explanations of which companies could fall under the proposal. Mr. Schwartz said there are concerns that the requirements could spread eventually to all of the more than 1,000 holding companies supervised by the OTS.
He added that paring down the number of companies affected would not address the fundamental problems the industry has with the initiative, such as fears it would slow mergers and acquisitions.
Changes at the White House have added to the uncertainty surrounding the proposal. Industry sources have predicted that Ms. Seidman will be replaced by the incoming Bush administration before her five-year term ends in October 2002. She said she plans to stay in the job, and that it is unlikely that anyone would want to fill out the rest of her term.