Due to a typographical error, the assets of Washington-Lee Savings and Loan Association were listed incorrectly in yesterday's editions. The correct figure is $319 million.
There was a predictable roar of outrage in the offices of suburban savings and loan association executives yesterday, after the Federal Home Loan Bank Board began formal consideration of a proposal to permit District-based S&Ls to branch throughout the metropolitan area.
Several S&L executives said it would be patently illegal for the bank board to declare such a new policy. A court challenge was considered a foregone conclusion if the federal agency approves such a switch.
No new interstate S&L branching has been permitted since the 1930s but Washington institutions have argued that the city represents a "unique" situation where S&Ls cannot serve a substantial metropolitan marketplace.
"I don't know any reason why they would want to come in here... I'm certainly not in favor of it," said Richard Lawton, president of McLeanbased First Financial of Virginia Corp., which owns the $19 million Washington-Lee S&L.
William Walde, president of the $50 million Dominion Federal S&L in McLean, used stronger words to denounce the bank board's initiative -- taken after considering for several years the proposals of city S&Ls to branch across the state lines of Maryland and Virginia.
"That's a lot of baloney," said Walde, describing Washington-based Perpetual Federal S&L's plea that inner-city housing mortgage needs cannot be met without access to the area's major population base -- in the suburbs.
Walde accused Perpetual of trying to engage in "carpetbagging" by taking funds away from the suburban home market. "Perpetual has been lazy and unwilling to use federal programs (to finance inner-city construction) ... they have all the money they can possibly use, they can lend all of the money they want in D.C.," Walde asserted.
Most of the suburban S&L leaders interviewed yesterday expressed no interest in branching into D.C. or outside their state, within the metropolitan area which also would be permitted if D.C.-based associations are allowed to open suburban offices.
Alexander Boyle, president of the $319-million Government Services Savings & Loan, in Bethesda, said that yesterday's action by the bank board -- which called for public comment within 45 days on whether it should move forward with new branching rules in the D.C. area -- "is an absolutely stunning development."
The Government Services executive said his main concern is that one agency, dealing with one segment of the financial services industry, should not be establishing a major policy change.
"This is an overall national financial services policy question, it's got to be dealt with in that context... There should be some kind of conscious undertaking by all the regulatory agencies" for banks and S&Ls, Boyle declared.
Boyle said his institution will "need a little time to formulate what our position is... there are obviously some really gigantic policy questions with different jurisdictions and questions of total equity and fairness and reciprocity" for both state-chartered and federal-chartered S&Ls.
Lawton, of First Financial in Virginia, said his reading of law in his state flatly prohibits any branching outside Virginia by state S&Ls and any branching into the Commonwealth by "foreign" or out-of-stat S&Ls.
Bank Board Chairman Robert McKinney said yesterday he recognizes "that some will regard any tpe of interstate branching, no matter how restrictive, as a possible first step toward broader interstate branching and possible even a national branching policy."
However, he continued, the board "is not addressing or committed to this complete question at this time."
At the same time, the agency chief said he regards the Washington proposal as a "test case." If the board moves forward to permit areawide branching, results would be monitored to ascertain the implications for metropolitan branching in other parts of the country, he said.
Citing staff studies, McKinney said D.C.-based S&Ls could expect to pick up $500 million of new deposits in five years with suburban branches -- of which $125 million in new mortagge funds would be made available for the inner city and the balance for home mortgages in the suburbs.
He argued that Wahington is the only metropolitan area in the U.S. where associations in the central city cannot open branches in suburban areas and noted that S&Ls in Maryland and Virginia can branch long distances from their home offices -- within their own state.
Dewitt Hartwell, president of the $369-million First Federal S&L of Washington, agreed with the bank board chairman's assessment of the city-based S&Ls' plight. "We have been landlocked into D.C. and have not had our share" of area deposit growth, Hartwell said.
First Federal has one office in Maryland that was opened before interstate branching was banned and Hartwell said his association would open suburban offices, if permitted.
The bank board's proposal will be published in the Federal Register early next week, after which public comments will be accepted.If the agency goes forward with a formal proposed order, another period of public response would follow before the proposed new regulations would become effective.