Word: ls
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...staggering cost of correcting the situation came into sharp focus last week, when the Federal Home Loan Bank Board, which regulates thrift institutions, announced a two-part bailout of 20 Texas S and Ls that could ultimately cost the Government $6.8 billion. First, the Bank Board conducted a fire sale of twelve failing Texas institutions, including Richardson Savings (assets: $707.8 million) and Mercury Savings ($332.9 million). The S and Ls will be merged and turned over to an investment group led by William Gibson, an executive vice president at Chicago's Continental Illinois bank, for a token $48 million...
...real shocker came a day later, when the Bank Board announced the largest rescue in its history. It plans to merge eight nearly moribund Texas S and Ls -- including Dallas' Sunbelt Savings, which lost $1.2 billion in the first three months of 1988 alone -- into one financial organization with assets of $6.9 billion. The Government will provide $2.5 billion of aid initially and possibly as much as $5.5 billion over the next ten years. Although the Bank Board had several offers to buy all eight S and Ls, it determined they were in such bad financial and legal shape that...
...Bank Board's moves are part of its so-called Southwest Plan for consolidating 109 ailing Texas S and Ls by the end of next May. The thinking behind the mergers is that the firms will save money by combining and streamlining operations and thus stand a better chance of survival. But the rescue plans will put a severe strain on the already cash-starved Federal Savings and Loan Insurance Corporation (FSLIC), the industry insurance fund that provides the money for the bailouts...
While the problems in commercial banking are serious, the situation in the savings and loan industry is an outright disaster. At least 500 of the more than 3,000 S and Ls are insolvent: their liabilities exceed their assets. In 1987 alone, the Government closed 17 insolvent S and Ls and paid stronger institutions to take over 31 more. The total cost to FSLIC: nearly $4 billion. FSLIC (pronounced fizz-lick in the industry) would have shut down many more S and Ls, but the agency virtually ran out of money to pay depositors. In the meantime, the insolvent...
...prosecutors say they have uncovered a pattern of misdeeds spurred by greed. "People got into the J.R. Ewing syndrome," says Henry Oncken, the U.S. Attorney in Houston. "The more they made, the more they got caught up in making more." Some S and Ls that believe they were plundered by their officers are taking them to court. Dallas-based Sunbelt Savings Association is suing former Chairman Edwin McBirney III and other ex-managers for $630 million. The suit alleges in part that McBirney paid "excessive commissions and fees" to friends and relatives. In one instance, McBirney is accused of allowing...