Thrifts : Mutual Quits S&L; Trade Group to Protest Stand

Pasadena-based Mutual Savings & Loan Assn. has withdrawn from an industry trade group to protest the organization’s lobbying stand on S&L; bailout legislation.

The trade group--the U.S. League of Savings Institutions--has been trying to persuade Congress to ease some of the tougher new capital standards contained in a bill designed to save crippled S&Ls.; In a letter to the league Tuesday, Mutual Savings Chairman Charles T. Munger said his institution was leaving because it objects to those efforts.

“It is not unfair,” the letter said, “to liken the situation now facing Congress to cancer and to liken the league to a significant carcinogenic agent. . . . In the face of a national disaster which league lobbying plainly helped cause, the league obdurately persists in prescribing continuation of loose accounting principles, inadequate capital and, in effect, inadequate management at many insured institutions.”

Current regulations require S&Ls; to maintain capital reserves equal to slightly more than 3% of outstanding loans, but they allow savings institutions to count intangible assets--known as “goodwill”--as part of the reserves. The Washington-based league objects to a legislative provision requiring institutions to replace all goodwill assets with cash over a five-year period.

Mutual Savings timed its announcement to register its concern over a recent 17-17 tie vote in the House Judiciary Committee on an amendment to weaken the proposed goodwill provision, said Warren E. Buffett, chairman of Omaha-based Berkshire Hathaway Inc., a holding company that owns Mutual Savings’ parent company. Mutual Savings ranks 70th in assets among California S&Ls.;

“The lobbying effort nearly created a vote . . . that would have taken all the teeth out of the legislation,” Buffett said.

James Grohl, a senior vice president of the league, said his association supports alternative methods of meeting higher capital requirements. He said most of the trade group’s 2,800 members support the association’s efforts.

“They (members) all have points of view, and it’s impossible for us to meet the expectations of every single element,” he said. “We can’t please everyone.”