Supervisory oversight of the S&L industry was both decentralized and split from the examination function. The FHLBB designated each regional Federal Home Loan Bank president as the Principal Supervisory Agent (PSA) for that region; senior Bank staff acted as supervisory agents. However, field examiners reported to the FHLBB in Washington rather than to the regional PSA, and the regional PSAeffectively reported to no one. In fact, according to one insider, the regional Federal Home Loan Banks operated like indepen- dent duchies. 9 Because the regional Banks were owned by the institutions they supervised, the potential for conflicts of interest was quite strong. In any event, supervisory agents did not receive.
