Federal Home Loan Bank Board Chairman Edwin J. Gray will resign soon because of pressure from White House Chief of Staff Donald T. Regan, high-level sources in the savings and loan industry confirmed Monday.
Though Gray hasn't made a decision on timing, it's believed that the resignation announcement will follow the savings and loan industry's national convention in Dallas early next month.
Gray would not publicly confirm the reports. "I have made no decision at all to leave," he said. As bank board chairman, Gray is the principal regulator for the nation's 3,200 federally insured S&Ls.
Reports of Gray's pending resignation sparked a strong statement of support from the California League of Savings Institutions, an industry trade group. "While our industry has opposed certain (bank board) actions from time to time, Gray has basically been right on the big issues," California League Chairman Gerald D. Barrone said.
S&L industry insiders say Gray is being forced out by Regan, the former Treasury secretary who became President Reagan's chief of staff earlier this year. Regan reportedly passed the word to Gray several weeks ago that he wanted the bank board chairman's resignation.
"Regan is on top of all this," said one former top S&L regulator. Regan could not be reached for comment, and Gray declined to discuss the subject.
The two officials have differed about the necessity and importance of a separate thrift industry and, The Times has learned, fought bitterly in private last year during the height of a deposit run at Financial Corp. of America, the nation's largest savings and loan holding company.
Gray was furious with Regan's public statements suggesting that the U.S. government would not guarantee FCA's deposits, as it had done earlier in the year with Continental Illinois National Bank. Those remarks led to an exchange of letters between the two that were "brutal" in tone, said one source who has read the correspondence.
Gray and Regan also disagree about how to handle the problems of the Federal Savings and Loan Insurance Corp., the underfunded agency under Gray's control that guarantees customer deposits up to $100,000.
Gray supports keeping the FSLIC separate and solvent, while Regan reportedly favors merging the agency with the better capitalized Federal Deposit Insurance Corp. The FDIC insures deposits at most commercial banks.
Gray got the bank board post largely because of his close ties to President Reagan, whom he served as press aide for six years in the 1970s and in 1980.
He has been highly controversial, largely because of stands that he took against rapid growth and the way in which S&Ls raise and invest deposits.
He didn't help his cause much recently when he suggested that Congress give the bank board authority to assess 1% of industry deposits, or about $8 billion, to bolster the FSLIC fund. That suggestion drew a negative reaction even from his supporters.
Gray has said privately that he would like to return to Southern California and make some money as chief executive of a savings and loan association. He is known to be ailing financially because he's trying to maintain two homes--one in Washington and one in San Diego--and put his children through college on an annual salary of $73,000.