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Transferring the supervision of savings and loan holding companies to the Federal Reserve
The Office of Thrift Supervision (OTS) currently supervises savings institutions and their holding companies. The Dodd-Frank Act transfers responsibility for supervising these institutions to the other bank regulatory agencies. The Federal Reserve will have supervisory and rule-writing authority for savings and loan holding companies (SLHCs). To ensure a smooth transition, the OTS and bank regulatory agencies including the Federal Reserve have been working closely together to plan for this transfer and educate the thrift industry about their supervisory frameworks.5 The Federal Reserve will assume supervisory authority for over 400 SLHCs on the July 21, 2011, transfer date.
Teresa M. Curran, group vice president, Supervision and Risk Group, discusses the transfer of supervisory authority for savings and loan holding companies.
Most of these companies are traditional “shell” holding companies that conduct little activity outside the savings institution subsidiary. Others are commercial enterprises or insurance companies. The Federal Reserve believes that companies controlling depository institutions should be held to appropriate prudential standards and intends to create an oversight regime for SLHCs that is consistent with what is applied to bank holding companies. These companies differ in important ways, and will remain governed by different statutes. The Federal Reserve will be mindful of these differences and of the unique characteristics of the thrift industry at it develops a supervisory approach for SLHCs.
Staff members are reviewing all elements of this supervisory program to determine whether and how to incorporate SLHCs into the framework in a manner consistent with the Home Owner’s Loan Act of 1933. This law governs the conduct and supervision of thrift activities and was preserved by the Dodd-Frank Act.6
The Federal Reserve Bank of San Francisco is making a unique contribution to the transition of supervisory authority for SLHCs by temporarily assigning a senior officer to the Federal Reserve Board to coordinate the transition of supervisory authority for SLHCs within the Federal Reserve System. This officer is responsible for managing a range of policy, supervisory, and operational issues leading up to the July 2011 transfer date, including establishing supervisory standards for SLHCs, incorporating SLHCs into holding company programs, communicating with the savings and loan industry, and addressing issues related to reporting and data access.
The Twelfth Federal Reserve District is home to about three dozen SLHCs with total assets ranging from about $100 million to over $100 billion. Most of these companies mainly carry out traditional thrift or bank activities. However, several have substantial business lines outside the thrift subsidiary, including insurance underwriting and securities brokerage.
5. See Joint Implementation Plan 
regarding sections 301-326 of the Dodd-Frank Act.
6. On February 3, 2011, the federal banking agencies proposed changes to the reporting requirements for entities regulated by the OTS.
7. See, for example, the Financial Stability Oversight Council's Integrated Implementation Roadmap .
8. See the Federal Reserve Board's October 1, 2010 press release about the formation of the Community Depository Institutions Advisory Council (CDIAC).
