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Transition Time for OTS

Adam Rust's picture

Posted September 3, 2010

No one can know what to expect from the  Office of Thrift Supervision over the next ten months.

The Dodd-Frank bill spells out the end for the OTS. Thrifts under its supervision will all have a new primary regulator. Most will become supervised by the Office of the Comptroller of the Currency. State-chartered thrifts, of which there are only about fifty, will become the concern of the FDIC. The others will move to the care of the Federal Reserve.

Those changes won't happen until the summer of 2011. In the time between, thrifts will

enter a period with no precedent. The OTS is often seen as comparatively hands-off, at least compared to the other regulators. If that is true, there is no reason to believe that it would change. It is possible that any institutional instinct to work with that principle would only be buttressed by the prospect of a looming closure. One more "known" factor that can't be ignored is that many employees at the OTS will likely be transferred to their new regulator. There is an entire section of the Dodd-Frank bill that spells out the employment prospects for the OTS' employees, down to the care of their retirement accounts and their service time.

Opportune Moment for the Tax Refund Season

If thrifts decide that the OTS is a tiger without teeth, they'll smell opportunity.  My feeling is that the change at the OTS is only going to make next year's tax season more unusual. The absence of the debt indicator makes 2011 a once-in-a-decade season. A year with a lame-duck regulator and no debt indicator - that's a never-before situation.

Metabank is regulated by the OTS. It is the only one. Republic,and River City are under the supervision of the FDIC. Ohio Valley Bancorp is regulated by the Federal Reserve. HSBC is regulated by the OCC. Next year, MetaBank will go under the watch of the OCC.

MetaBank announced a new four-year agreement with the Santa Barbara Tax Products Group (TPG) on August 20th. MetaBank provide refund checks through TPG last year. This agreement sets up both checks and RALs.