Originally created 04/01/97

S&L regulators wade into hi-tech world by seeking ideas on rules

WASHINGTON - Wading into the world of home-banking PCs, automated loan machines and smart cards, federal thrift regulators are seeking ideas on how its rules can be loosened to encourage new technologies.

Nicolas Retsinas, the nation's top savings and loan regulator, paraphrased the Luke Skywalker character from "Star Wars" to explain it Monday. "In banking, in lending, the Force is technology," he said.

Retsinas, director of the Office of Thrift Supervision, said the agency is soliciting public comment on whether its regulations hamper the use of new electronic technology by savings and loan associations and their customers. Such rules, for example, limit thrifts' sales of their software and excess computing capacity.

"These are difficult, difficult issues," Retsinas told a news conference. He said the agency's decision to seek public input "puts us abreast of these evolving issues." It also appears to put the OTS ahead of regulators of banks and other financial institutions in the high-tech game.

Retsinas and Paul Glenn, the agency's special counsel, said they would consult with the other financial regulators. Glenn said thrift regulators "want to avoid being an impediment to electronic banking," while still ensuring a safe and sound environment for the S&Ls.

There will be a 60-day period for public comment after notice of the agency's intent is published Wednesday in the Federal Register.

Brian Smith, director of policy and economic research for America's Community Bankers, said the action was very timely.

"We're absolutely in favor of casting the net as wide as they (the OTS) are doing," said Smith, whose group represents 2,000 S&Ls and community financial institutions.

Among the areas for comment:

- Whether customers should be able to open accounts and request loans through automatic teller machines at remote locations.

- Whether thrifts should require special security safeguards or standards for personal computers used for banking at home. The OTS noted that PC home banking is expanding beyond "dial-up" systems to actual Internet banking, in which encryption and other safeguards are used.

- To what extent S&Ls should be able to sell Internet services, financial computer software or related services and whether they should be allowed to operate for-profit subsidiaries that sell such services.

- Whether rules should be adopted governing thrift customers' use of so-called smart cards that store "money" in computer chips or magnetic strips. Funds can be added or subtracted from the cards, which are used to pay for products and services.

The OTS, an agency of the Treasury Department established to handle the savings and loan crisis of the 1980s, also proposed streamlining its rules governing deposits at savings institutions.


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