The Office of Thrift Supervision is expected to let a unit of Travelers Group Inc. charter a federal thrift next week.
The big question is what special conditions the agency will place on the New York-based insurer and its thrift.
In an interview Thursday, OTS Director Ellen S. Seidman said the applications filed by Travelers and six other insurance companies raise novel issues for regulators.
"How do we deal with institutions that do business on a nationwide scope and may or may not have branches?" Ms. Seidman asked. "It is just irresponsible" to rush consideration of such novel applications, she added.
The OTS also needs to decide how the Community Reinvestment Act will apply to these institutions, Ms. Seidman said. She did not detail how these issues might translate into limits or conditions on the newly chartered thrifts and their insurance firm parents.
The OTS extended its review on the Travelers application by 30 days to Nov. 24. "We got a new director in the middle of all this," Ms. Seidman noted. She started work on Oct. 28 and said she needed time to review the insurance companies' requests and address the public policy issues raised.
The agency, however, will not delay action on any application simply to avoid criticism from Congress, Ms. Seidman said. Lawmakers have scolded regulators for attempting piecemeal financial services reform while Congress has been unable to enact legislation.
"I was not thinking about what was happening in Congress," she said.
Regardless of concern about the applications from lawmakers, Ms. Seidman said, the renewed interest in the federal thrift charter has boosted morale at OTS.
"There is a lot of positive mood building because the applications have been filed and people are recognizing the value of the thrift charter," she said. However, she stressed that this will not color the way the OTS rules on the requests.
Eleven insurance, securities, and other nonbank firms in all have thrift applications pending at the OTS.
Though she expects other nonbanking firms to ask for federal thrift charters, Ms. Seidman said she does not expect the pace to increase dramatically.
