WASHINGTON Office of Thrift Supervision Director Ellen Seidman has quietly told industry executives that she will dump her controversial plan to more closely monitor thrift holding companies.
In a meeting with Florida bankers Wednesday, Ms. Seidman said the proposal, which has drawn a firestorm of criticism from the industry since it was unveiled in October, would not be adopted in its current form.
The next thing you see wont be a final reg, OTS officials confirmed Ms. Seidman had said.
But industry critics said the statement leaves the door open for the OTS to repropose the idea in a different form later.
Its too early to say the OTS will withdraw the proposal, but it is clear they got the message that the proposal missed the mark, said Diane Casey, president of Americas Community Bankers. I think by scanning the comment letters that the lack of support for the proposal as drafted means that the OTS has a lot of work to do.
Comment letters on the plan, which were due last week, were almost universally negative. Under the proposal, holding companies would have to give examiners 30-day notice before significantly increasing debt, slashing capital, or making major acquisitions.
Critics said the plan was too restrictive and would put thrift holding companies at a competitive disadvantage against bank holding companies. Many observers said that they expect the OTS to resubmit a significantly revised proposal at some point.
They recognized that they have to go back and take a different approach, said Stuart G. Stein, a partner in Washington at the law firm of Hogan & Hartson LLP. They will consider other ways to approach the problem within their current regulatory framework. I think they are still trying to figure out how no one knows what the answer will be.
Other observers concurred.
It sounds like they will put out another proposal, said Gilbert T. Schwartz, a partner in the Washington law firm Schwartz & Ballen. Exactly what it will be, who knows? I think they are pulling it back to revise it and make it more user-friendly.
An OTS spokesman declined to elaborate on the agencys plans or on Ms. Seidmans comment, but a statement released late Wednesday from Scott M. Albinson, the agencys managing director for supervision, made it clear that the OTS remains worried about some thrift holding companies.