Regulator Criticized for Curb on New S

California Savings and Loan Commissioner William Crawford was accused Tuesday by a variety of industry executives of knuckling under to federal officials and abandoning the state’s leadership role in the deregulation of financial institutions.

The sharp reaction was in response to Crawford’s statement Monday that California “doesn’t need any more savings and loan offices” and his refusal to allow formation of any new S&Ls; in California.

“What Crawford seems basically to be saying is that we are going to have a continuing trend away from state autonomy,” said financial consultant Edward Carpenter, chairman of the Los Angeles-based Carpenter Group. “His decision was a state decision, but its terms appear to have been dictated by” conservative federal regulators.

“Turning the water off is a ridiculous exercise,” said Charles Storm, president of Bay Savings & Loan Assn. of Monterey. “I find it very hard to believe that California doesn’t need new S&Ls.;”

No New S&Ls;

Crawford’s refusal to approve creation of any new S&Ls; could also be detrimental to consumers, his critics said.

“Competition, in the long run, benefits consumers,” by providing the broadest variety of services and the lowest possible interest rates, said Regan Kelly, an S&L; attorney and former special assistant to Crawford’s predecessor, Lawrence Taggart.

Both Crawford and a spokesman for Gov. George Deukmejian scoffed at such criticism. Larry Thomas, press secretary to the governor, said “it would be a mistake” to think that Crawford will allow federal officials to dictate state policy.

Crawford said he believes that the number of S&L; applications has no relation to public demand. “A lot of people were sold the idea that S&Ls; are money machines. That’s what stimulated demand. That and liberal investment powers.”

Still, he disagreed with critics who see his actions as an about-face from the liberal policies promoted by Taggart.

Ernest Leff, a Los Angeles attorney specializing in S&L; law, said: “On a local level, (Crawford) will support his institutions. But apparently in his relations with the (federal regulators) he is willing to go along rather than engage in combat like his predecessor.”

Attuned to FHLIC

Leff was one of several critics who said Crawford’s decision shows that he is philosophically attuned to Federal Home Loan Bank Board Chairman Edwin Gray, who is a strong critic of the liberal investment policies that California has allowed its S&Ls; in recent years.

Former Commissioner Taggart was also faced with federal opposition to the expansion of California S&Ls;, but he continued to approve new charters and forced the federal government to take the criticism for holding up the opening of many new associations. More than 200 groups of California investors have applied for state S&L; charters in the past three years, following passage of legislation that granted S&Ls; expanded investment powers.

Crawford said his decision to halt processing of state S&L; charter applications affects fewer than 70 organizing groups. But the Federal Savings and Loan Insurance Corp., which insures accounts at all California S&Ls;, has announced an indefinite freeze on all applications from state chartered S&Ls; in California, Texas and Florida. That action affects several hundred applications, including about 150 in California.