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Old Thrifts Chase Federal and Financial Federal Merged as New Corp

August 31, 1993

MIAMI (AP) _ Edwin Gray, once the nation’s top thrift regulator, resigned Monday as president and chief operating officer of Chase Federal Bank FSB after an investor group bought and merged the bank with Financial Federal Savings & Loan.

The investors injected $108 million in fresh capital into the two thrifts, which will be owned by a new company, TAC Bancshares. The new institution has $11.8 billion in assets, 25 branches and will retain the Chase Federal Bank name.

Gray’s duties were assumed by Thomas A. Cooper, who also replaced Financial Federal’s chief executive, Raymond Guisnard and Charles L. Clements Jr., who retired as Chase Federal chairman and CEO.

Cooper said TAC recapitalized Financial Federal and Chase to bring both thrifts into full regulatory compliance in a deal approved by the Office of Thrift Supervision.

Gray is best known as the Reagan Administration regulator who gave early public warning of trouble in the savings and loan industry.

″This was the goal that I had worked for actually for the last three years,″ he said, describing the acquisition as ″a dream come true″ because it was completed without taxpayer money.

″I knew I would work myself out of a job with accomplishing this goal,″ he added. ″But I always saw it as a goal which would hold other opportunities in the future.″

Gray said he was looking forward to returning to his San Diego home, which he left 13 years ago.

He had been with Chase Federal six years after having served a full, four- year term as chairman of the Federal Home Loan Bank Board, the predecessor to the Office of Thrift Supervision.

The resignations of Gray, Guisnard and Clements were required as part of the acquisition.

″Part of the arrangement was that we would bring in the management team. Both (thrifts’) sides are resigning,″ Cooper said. ″There is no implication over anything that they’ve done during their careers. It’s just that the (new) management came with the capital.″

Gray was regarded by some analysts as courageous when he bucked the Reagan Administration by sounding an early warning on the dangers of thinly capitalized savings and loans, and seizing several weak thrifts.

″At some point in the future, massive infusions from the U.S. Treasury - and hence the American taxpayers - may well be necessary to shore up the system,″ Gray said in 1984.

By 1987, when Gray’s term ended at the Federal Home Loan Bank Board, he said he felt he was regarded as a ″pariah among many in the industry I regulated″ and had been lucky to get a job.

In 1987, when Gray arrived at the thrift, Chase Federal was already trying to improve its capital levels. The thrift’s losses in recent years were due to commercial loans made prior to Gray’s arrival, according to published reports.

Cooper said the merger signals a new focus for Chase Federal on the mass consumer market.

″We will not be doing commercial lending. ... We’ll be doing residential mortgage loans, education loans, home improvement loans,″ said Cooper, former president and CEO at Bank of America and president of BankAmerica Corp.

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