HomeRegulatorsThe Office of Thrift Supervision (OTS)

The Office of Thrift Supervision (OTS)

The Office of Thrift Supervision (OTS) was once the US government organization responsible for regulating the savings and loans industry. However, as you will learn in this article, the organization was merged with other regulators in 2011. We will be explaining how regulators like the OTS help monitor and uphold international money transfer standards.

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About The Office of Thrift Supervision (OTS)

The Office of Thrift Supervision (OTS) was created in 1989 in response to the savings and loans crisis of the 1980s. Speaking on the subject of the newly established OTS, reigning President George H. W. Bush said: “Never again will America allow any insured institution to operate normally if owners lack sufficient tangible capital to protect depositors and taxpayers alike.”

The Office of Thrift Supervision was an official federal agency under the United States Department of the Treasury. Initially, the OTS had an active and aggressive approach, but this dwindled as a result of the decrease in revenue and staff numbers. The OTS received funding from banks and other US federal bank regulators.

On the 21st of July 2011, OTS was dissolved because of being implicated in backdating scandals regarding the balance sheet of IndyMac. However, the work the OTS did was important so it was merged with other existing US regulators, such as The Office of the Comptroller of the Currency, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, and the Federal Reserve Board.

What was The Office of Thrift Supervision responsible for?

In this section, we will outline the main responsibilities of OTS. We explain how OTS helps contribute to a safe banking system and how it might affect international money transfer customers. Keep in mind that the OTS is no longer operating, which means these responsibilities were inherited by the regulators it was merged into.

The main duties of the OTS included:

  • Supervising thrift institutions and holding companies. It provided consolidated supervision for high-profile firms such as Merrill Lynch, Morgan Stanley, American Express, Ameriprise Financial, AIG Inc and General Electric.

  • Overseeing the Federal Savings Associations, for which it was the primary regulator. This included the Federal Savings and Loans and Federal Savings Banks associations.

  • Enforcing regulations to state-chartered and federal thrift organizations to operate in a financially sound manner.

Why was The Office of Thrift Supervision important?

The OTS was important because confidence in the financial system was shaken as savings and loans institutions began taking bigger risks. It resulted in such organizations not having enough money to pay out depositors, which means people would lose money if they went bankrupt. The OTS was formed to audit organizations and enforce rules to use sound financial principles to manage their books.

Organizations that were seen as corrupt or not following the rules would be forced to close down. This saves the general public from depositing money with organizations that could lose their funds. The OTS served an important regulatory role for a specific segment of the US financial system. International money transfer customers that sent money to thrift banks are now protected because of tighter regulation.

What regions did The Office of Thrift Supervision cover?

The OTS was a United States government entity, which means it is limited to regulatory activity within the US. US financial organizations and foreign entities offering services in the US fall under the jurisdiction of the OTS. Every organization operating in the US has to follow US law. This means OTS had the right to enforce rules and audit any organization taking part in the US financial system.

When did The Office of Thrift Supervision get involved?

You may have encountered the OTS if you had deposited money in a financial organization that had risky practices or put your money at risk in a way that did not follow the law. You could have filed a claim for the OTS to look at your case and potentially inspect an organization.

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Bottom line

The OTS was a government organization that was founded as a reaction to the savings and loans crisis. Ultimately, they removed over 3,000 financial organizations that did not follow US law. However, because of its own problems, the OTS was forced to merge with other US regulatory bodies. You can learn more about the US banking system by checking out other Regulators or reading our reviews of the leading American banking corporations. We firmly believe it is important to understand how your funds are safeguarded when sending money across borders and strive to protect our readership by providing as much helpful information as possible.

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Article Factchecked by Elliot Laybourne on 20th July 2022 Elliott is a former investment banker with a 20 year career in the city of London. During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making. During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others.
April Summers
April Summers
April is a trained journalist and the Content Editor for She has 10 years experience writing about a diverse range of subjects, from financial services to arts and entertainment. When she's not writing about global remittances she can be found daydreaming about her next holiday abroad.