Except for a 3 p.m. staff meeting at Pacific Savings Bank headquarters, there was little evidence Tuesday that a joint task force of federal regulators had just moved in to assume oversight of the insolvent Costa Mesa institution.
Customers continued to come and go, employees went about their business as usual, and managers of the troubled thrift kept operating the same way they have for months.
Despite the flurry of attention focused on Pacific Savings, little actually changed as the S&L became one of the first targets in the Bush Administration's intensive effort to clean up the nation's savings and loan industry.
Pacific, which was put into a conservatorship Tuesday, is one of more than 500 savings and loans across the country that have lost billions of dollars as a result of industry deregulation, economic downturns, mismanagement and, in some cases, outright fraud.
The change in supervision is expected to have no noticeable effect on Pacific Savings' customers, whose deposits continue to be insured up to $100,000 each.
Through much of last year, regulators and industry leaders viewed the S&L as "salvageable" and a likely candidate for a merger with a healthy organization.
For now, though, anyone who wants to buy Pacific Savings may have to wait. Members of the joint task force, composed of banking and S&L regulators, said they aren't sure exactly who would be authorized to approve a sale.
Meantime, "it's business as usual" for the S&L and consumers, one regulator said. The same managers hired 20 months ago from Glendale Federal Savings & Loan will continue to operate Pacific Savings under the same business plan as before.
"I do feel it's a positive process, and we intend to cooperate," said Harvey A. Lynch, a GlenFed executive acting as president of Pacific Savings. "We've been told that the business plan is consistent with what the banking and savings and loan regulators believe is prudent."
Part of the blame for the savings industry debacle has been pinned on deregulation in 1982, which ushered in an entrepreneurial management spirit and, some say, a lax regulatory attitude.
Many S&Ls jumped at the opportunity to make nontraditional investments, such as direct ownership in real estate ventures. And many of those investments eventually turned sour, leaving the federal S&L deposit insurance fund all but bankrupt.
Pacific Savings lost a total of more than $262 million in the last 6 years as it pursued a strategy of selling off many of its branches while favoring commercial lending in California and speculative investments in Texas and other Southwest states.
Members of the joint task force at the S&L and Pacific Savings personnel viewed Tuesday's action as little more than a "regulatory shift of power."
"Liquidation is not an option for us," one Pacific executive said. "As far as we know, we're still being considered for sale."
But banking regulators, particularly the Federal Deposit Insurance Corp., are known for acting quickly and, often, for liquidating ailing institutions.
"I think this means that the chances Pacific could be prepared for liquidation are greater now than ever before," said Edward Carpenter, a Costa Mesa banking consultant. "The goal now is to accomplish quick reviews and quick actions."
FDIC officials acknowledged that their aggressive approach will speed up the handling of failed S&Ls once Congress approves the funds for the program laid out Monday by President Bush.
All insolvent S&Ls in Southern California will likely be put into conservatorships similar to that of Pacific Savings within a month, said Stephen Katsanos, an FDIC spokesman.
The FDIC and other banking regulators--the Office of the Comptroller of the Currency and the Federal Reserve Board--were pulled into service under President Bush's proposal to help resolve the mess in the ailing S&L industry.
Some 350 S&Ls nationwide are still insolvent, and the seizure of Pacific Savings and three other S&Ls on Tuesday was the first step in Bush's plan to take control of all insolvent savings institutions and quickly merge or close them. The joint task force plans to seize 224 S&Ls in the next few weeks.
Other likely Southern California targets for seizure include the following institutions, with regulatory net worth figures as of Sept. 30:
Westwood Savings & Loan of Los Angeles, minus $222.7 million; First California Savings of Orange, minus $71.4 million; Founders Savings & Loan of Los Angeles, minus $36 million; Arrowhead Pacific Savings Bank of San Bernardino, minus $23.4 million; Signal Savings & Loan of Signal Hill, minus $7.8 million; Perpetual Savings of Santa Ana, minus $11.5 million; Unified Savings of Northridge, minus $15.8 million, and Manhattan Beach Savings & Loan of Manhattan Beach, minus $18.6 million.
Another insolvent S&L, Carver Savings & Loan of Escondido, was closed Jan. 27 by the Federal Home Loan Bank Board. Carver had reported a negative net worth of nearly $10 million on Sept. 30.