savings institution directors to be on the lookout for signs of trouble, and offered two new guidebooks to help them identify those signs.

Speaking in Dallas before a crowd of 300 board members from 75 institutions, Office of Thrift Supervision Director Ellen S. Seidman said she is concerned that economic prosperity might cause directors to fall asleep at the wheel.

"By and large, directors of OTS-regulated thrift institutions are hardworking, diligent, and community-focused," she said. "However, in good economic times it is easy to let down your guard and allow your oversight responsibility to go on cruise control."

The OTS organized this meeting of directors from thrifts in the agency's 14-state Midwest region to discuss the responsibilities of oversight. Similar meetings will be held in the coming months in the agency's four other regions.

At the meeting, the OTS released a pair of books designed to help directors do their job. The first, which details the role of a director, covers topics such as selecting and retaining competent management, establishing objectives, identifying risks, and complying with laws and regulations. The second volume explains how to read management reports.

Ms. Seidman said she is concerned that so few directors experienced the thrift crisis of the 1980s. "Over the past several years, turnaround has been high among thrift directors, because of the influx of new institutions, mergers and acquisitions, and retirements," she said.

Ms. Seidman urged directors to pay careful attention if their institutions enter riskier lines of business, such as speculative construction lending.

"It may well make sense to move into areas of somewhat greater risk, if the increased risk is accompanied by greater returns," she said. "But this must be done properly, with the full participation of an active, informed board."

-- Louis Whiteman

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