U.S., California Freeze Requests for New S

An indefinite freeze has been placed on all new savings and loan associations in California, federal and state banking regulators disclosed in separate interviews Monday.

The actions affects about 150 so-called de novo associations, which are S&Ls; in organization. The regulatory actions mean that the number of S&Ls; in California will remain at 200 for the foreseeable future, according to regulators from the Federal Home Loan Bank Board and the California Department of Savings and Loan.

The actions are part of the continuing debate about the expanded investment powers of state-chartered savings and loan associations in states like California, Texas and Florida, where the bank board freeze also applies. The expanded powers have outraged industry traditionalists, who argue that S&Ls; should generally stick to making mortgages on single-family homes.

Affects About 150 Applications

The federal freeze affects about 50 applications awaiting deposit insurance from the bank board, while the state freeze affects about 100 additional de novos, regulators said.

New state-chartered S&Ls; in California must first get approval from the Department of Savings and Loan. Then, they must get deposit insurance approval from the bank board.

The federal action reflects the belief in Washington that California does not have enough bank examiners as it is. About 160 of California’s S&Ls; have state charters.

Meanwhile, the state freeze reflects the belief of William Crawford, commissioner of the Department of Savings and Loan, that the state doesn’t need any more S&L; offices.

“I have not approved one new application, and I have been here (as commissioner) since February,” Crawford said.

Frank Haas, who heads the district bank system for the bank board, said California will have to add a “substantial” number of new bank examiners before any new S&Ls; are permitted to open. (The Department of Savings and Loan currently has 54 examiners, and another 13 are expected to be hired before the end of the summer, Crawford said.)

In Effect Indefinitely

If California wants expanded investment powers, Haas added, it must have the supervisory capabilities to monitor these activities. Haas added that the insurance freeze, which was instituted early this year, will remain in effect indefinitely.

Crawford appeared to back the bank board’s actions, saying that they are necessary to restore public confidence in an industry that was recently battered by deposit runs at some privately insured S&Ls; in Ohio and Maryland.

“Integrity and public confidence are the key,” Crawford said. “Once you lose that, you don’t have anything.”

Further, Crawford added, California “doesn’t need any more savings and loan offices. The law of supply and demand has served us well.”

However, the regulatory actions have taken a heavy toll on those who have been waiting for months for their charters and deposit insurance.

“We don’t know where we stand, and we don’t know if we’ll ever get the approval,” said a frustrated James Davis, who has been trying since December, 1983, to get federal deposit insurance for his de novo association in the Bay Area.