Fed seeks comment on oversight of S&L holding companies
The Federal Reserve is requesting comment on a plan that outlines how the central bank will assume its new responsibility of overseeing savings and loan holding companies. Savings and loan institutions, or thrifts, were the root cause of the late 80s-early 90s recession after about half of the nation's savings and loan associations failed due to their ties to fledgling real estate prices and a general slowdown in the financial services industry. The Dodd-Frank Wall Street Reform and Consumer Protection Act stipulates that the Fed will take over supervisory and rule-writing authority for S&Ls and their non-depository subsidiaries. Currently, the Office of Thrift Supervision is charged with overseeing the segment, but that responsibility shifts to the Fed July 21. In its proposed plan, the Fed says it expects the consolidated capital requirements of S&Ls to be addressed in the Basel 3 rulemaking process. The Fed indicated it would assess S&L capital levels using methods similar to the OTS until consolidated capital standards are laid out for that segment. The notice on how the Fed plans to assume its supervisory authority will be published in the Federal Register by the end of May. The OTS has been the subject of criticism in federal studies outlining some of the oversight problems that contributed to the 2008 financial crisis. Discussions about the end of the OTS have been underway for months, with the department expected to be fully absorbed into the Office of the Comptroller of Currency. Write to Kerri Panchuk.