Word: bailouts
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...near failure seven years ago into the largest savings and loan in the Southeast (peak assets in 1989: $11 billion). But the building took on a gloomier symbolism last month when federal regulators seized the now insolvent thrift and ousted its top executives. As the Government conducts a bailout that could cost $2 billion, federal agencies are investigating David Paul, 50, the CenTrust chairman who presided in grand style over the thrift's rise and fall. Paul, says Florida's top banking regulator, treated CenTrust "as if it were his own personal piggy bank...
...sell several hundred billion dollars' worth of real estate hangs over the market, depressing prices and even harming the loan portfolios of the remaining 2,600 S&Ls. And since the Government is counting on proceeds from the property sales to offset some of the costs of the bailout, sluggish disposal of the real estate could help push the total cost of the rescue to more than $300 billion during the next 30 years. "The cost of carrying that stuff is going to kill you and me as taxpayers," says Richard Kneipper, a Dallas thrift lawyer...
...billion in devaluing junk, Drexel's credit rating began sliding, and its banks cut off credit two weeks ago. The parent company, starved for cash, began to siphon money from the investment firm's coffers until Government regulators halted that maneuver. After a frantic search for a bank bailout or a merger partner, directors of Drexel Burnham Lambert Group agreed to put the company into bankruptcy proceedings...
While S&Ls own 7% of all junk bonds, depositors will be shielded from loss if a thrift runs into trouble because the Government insures deposits up to $100,000. But the junk-bond slump could increase the already enormous taxpayer cost of the Bush Administration's S&L bailout package (anywhere from $160 billion to $300 billion), since the Government will have to sell the securities at a loss...
...business front, Turner's turnaround has been impressive. After his abortive 1985 attempt to take over CBS and his costly acquisition of MGM's library of 3,300 old films, Turner appeared to be in financial trouble. In desperate need of cash, he turned for a bailout to a group of cable-owning companies (among them Time Inc.), which bought a large share of Turner Broadcasting. His stake in the company has been reduced from 80% of common stock to just over 40%, and for the first time he must get approval for major decisions from a board of directors...