U.S. League Members Gather To Brush Up on Survival Tactics

WASHINGTON - The survivors of the savings and loan crisis are gathering here this week for their principal trade group's annual convention, but they've not in a cheery mood.

Although they have made it through a devastating shakeout that sank one-third of their industry, and have managed to make profits under though conditions set by Congress, they find themselves facing a pressing problems that few anticipated: a deep recession that just won't go away.

So the convention has been geared to such themes as making sound loans and working out troubled ones.

"These are the survivors, the successful managers," Frederick L. Webber, president of the U.S. League of Savings Institutions, said of the 1,005 executives who registered for the convention that runs Sunday through Wednesday.

"But we're still in for some rough times ahead."

In contrast to past U.S. League gatherings, the delegates by and largest represent an elite core of about 500 profitable, capital-rich thrifts.

In addition to 1,005 executives, 805 spouses and 261 exhibitors are expected to turn out this week. Last year, the conference drew 1,270 executives, 1,055 spouses, and 335 exhibitors. During the mid-1980s, total attendance was often close to 5,000.

Prudent Lending is Theme

Most are coming to lear, not just to play. Making sound loans in a flagging economy will be one of the convention's dominant themes, said Mr. Webber.

S&L executives worried about the economy are expected to crowd into sessions on that subject. Residential real estate, once thought to be among the safest outlet for loans, is losing its luster in may parts of the country, despite record-low interest rates.

"It would be nice to have a positive economic scenario on both the deposit and asset side," said the top S&L regulator, Office of Thrift Supervision director T. Timothy Ryan. But while the recession has produced low interest rates that push down the cost deposits, "the real estate markets have been slow growth to no growth."

'Blood in the Streets'

In metropolitan Washington, where real estate problems are still growing, "blood is going to be flowing in the streets in 1992," predicted Gerald Chapman, president of Vista Federal Savings Bank, Reston, Va.

The same low interest rates that have pushed down thrifts' funding costs have pumped up demand among homeowners who are refinancing for fixed-rate mortgages - not just the adjustable-rate loans that most thrifts prefer to make.

"If you want to do business, you are forced into doing fixed-rated loans," said Robert H. Halleck, president of Maryland Federal Savings and Loan Association, Hyattsville, Md. "It is hard to do business, but I don't know that it is impossible."

An Eerie Reminder

Some industry veterans worry that too much fixed-rate lending could come back to haunt thrifts in a way to reminiscent of the record spike in interest rates in the early 1980s.

"Unfortunately, we have some people who still don't remember what happened to years ago," said Edmond M. Shanahan, presiden and chief executive of Bell Federal Savings and Loan, Chicago. "They're making fixed-rate loans at the worst time to do it, which is at the bottom of the cycle."

Despite all the talk about recession and interest rates, convention-goers have some other things on their minds. Among them:

* Reducing the high fees they pay for supervision; * Easing the strict qualified-thrift-lender test that requires thrifts to concentrate heavily on mortgage lending; * Equalizing Federal Home Loan Bank System membership rules for thrifts and commercial banks.

Several U.S. League members said it is time for Congress to legislate a merger of the Office of Thrift Supervision and the Office of Thrift Supervision and the Office of of the Comptroller of the Currency.

Their complaint: Regulatory assessments are too high, despite cost-cutting strides by OTS Director Ryan, and Mr. Ryan does not disagree.

Gerald J. Levy, chairman of Guaranty Bank of Savings, Milwaukee, complained that the OTS now plans to conduct annual examinations of even the strongest thrifts. "I think we'll see higher assessments as a result."

Desire for Parity

Thrift executives also want their membership in the Federal Home Loan Bank System to be voluntary - the same status available to commercial banks and credit unions since 1989. Thrift executives complain that mandatory membership makes thrifts second-class citizens.

"We feel like the Plains Indians watching the wagon trains roll in," said Brian Smith, executive vice president in the charge of the league's Chicago operations.

Also on the minds of many industry leaders are loan workout strategies. "We never foreclosed on a house in the 1980s," said Kenneth J. Abt, president and chief executive officer of First Federal Savings and Loan Association, Middletown, N.Y. "Today, we spend a lot more time working on delinquencies."

PHOTO : Edmon M. Shanahan Bell Federal Savings

PHOTO : Gerald J. Levy Guaranty Bank for Savings

PHOTO : Frederick L. Webber U.S. League president

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