A top bank official says the Federal Home Loan Bank Board's dual role as regulator of the savings industry and promoter of home ownership has contributed to the wave of S&L failures.
L. William Seidman, chairman of the Federal Deposit Insurance Corp., which insures deposits in commercial banks, said Wednesday the insurance fund for S&Ls should be independent of the bank board.The primary goal of the Federal Savings and Loan Insurance Corp., which insures deposits up to $100,000, is the safety and soundness of savings institutions, he said.
However, the FSLIC's parent, the Federal Home Loan Bank Board, is also charged with creating, or chartering, S&Ls to provide a steady flow of mortgage money to home buyers.
"There's a basic conflict between those two roles and I think it's very important that they be separated so that the insurer . . . can protect his insurance fund and not allow institutions that operate in an unsafe and unsound manner to have insurance," Seidman told reporters at a luncheon to release a 408-page FDIC report, "Deposit Insurance for the Nineties: Meeting the Challenge."
He recommended a regulatory structure for S&Ls similar to the system for banks. The Office of the Comptroller of the Currency, an arm of the Treasury Department, charters national banks, while the FDIC insures their deposits.