Pay scale decreases threaten to drive out S&L examiner staff.

Pay scale decreases threaten to drive out S&L examiner staff

The Office of Thrift Supervision (OTS) could face a hemorrhage of its best and brightest examiners in Southern California as it seeks to bring a uniform nationwide pay scale to its workers.

"We haven't met good examiners who are not looking for a job," said Babette Heimbuch, president of First Federal Savings Bank of California, based in Santa Monica.

The examination process is the primary means the government has of regulating the thrift industry. Some attribute the savings and loan crisis to negligent oversight by regulators. By the same token, the loss of top-notch examiners at the OTS would seem to cast doubt on the government's ability to rein in the industry.

OTS examiners had been employed by the 12 Federal Home Loan Bank branches until last summer, when the were transferred to the OTS under the Financial Institutions Reform, Recovery and Enforcement Act of 1989. The FHLB paid examiners more generous salaries than they would have received under government pay scales. It is estimated that supervisory agents receive between $125,000 and $150,000, field examiners, between $60,000 and $70,000 and analysts, between $35,000 and $40,000.

Although Janice Smith, a spokeswoman for the OTS, said the OTS does not intend to cut anyone's salary, many examiners in the 11th district, which includes California, presumably fear their salaries may become frozen as a result of imposing a unitary pay scale.

Such a drain would occur ironically at a time when many in the financial industry have words of praise for federal examiners.

"Five years ago most examiners should have been retired; now many are in their 20s and 30s and it's more like a public accounting firm," Heimbuch said.

In fact, five years ago the FHLBs took the bold step of replacing the government pay scale with their own, thereby enhancing their ability to recruit more desirable candidates.

Virtually all the S&L executives surveyed agreed with Heimbuch's praise of OTS examiners. "They are doing a much more professional and thorough job, and their people are more knowledgeable," said Gerald D. Barrone, president of downtown-based Coast Savings Bank.

This sort of respect for the examiners should facilitate their transition to the more remunerative private sector. Heimbuch said of the four examiners First Federal dealt with recently, it would consider hiring two or three of them. Barrone said Coast had even recently hired one examiner who had previously visited the S&L on official business.