Feds Move To Appeal Glendale Thrift
"Goodwill" Case
By JONATHAN NICHOLSON
WASHINGTON -- The Department of Justice filed a notice of appeal
Tuesday in a high-profile court case in which the federal government was
ordered to pay $908.9 million in restitution and damages to a California thrift.
The notice did not lay out any specific grounds for an appeal to the U.S.
Court of Appeals for the Federal Circuit. The case stems from the
government's actions in attempting to clean up a savings-and-loan mess of the
late 1980s.
On April 9, Chief Judge Loren A. Smith of the U.S. Court of Federal Claims
awarded $908.9 million to the plaintiff, Glendale Federal Bank, FSB, which
was acquired in September 1988 by thrift California Federal Bank. California
Fed's parent company is San Francisco-based Golden State Bancorp Inc.
The lead counsel for Glendale said the appeal had been expected.
"We think the time has long passed for the government to own up to its
responsibilities to Glendale and other 'goodwill' plaintiffs," said Ronald
Stevens, a partner with the firm of Kirkpatrick & Lockhart in Washington.
Stevens also said his client is examining the possibility they might file an
appeal, depending on what grounds the government cites to support its
appeal.
A spokeswoman for the Justice Department declined to comment on the
case.
The appeal may mean it will take even longer to settle the long-running case,
which centers on the withdrawal by the federal government of so-called
"supervisory goodwill" in the 1980s.
Goodwill provided leeway on capital requirements as an incentive for strong
thrifts to acquire ailing ones. But in 1989, the federal government withdrew
supervisory goodwill, putting some thrifts that had made use of it, below
required capital levels.
In 1996, the Supreme Court said the government could be held liable for
damages resulting from the change. The Glendale case was a bellwether
because it was the first case to get to the damages phase.
Despite warnings that the tab from Glendale cases and others like it could run
into the billions of dollars, damage awards in the two most high-profile cases
have been substantially below what plaintiffs had been asking for.
In the Glendale case, plaintiffs had sought up to almost $2 billion. In a
separate case involving California Federal directly, Judge Robert Hodges of
the Court of Federal Claims awarded only $23.4 million, well below the more
than $1.5 billion that had been sought.
-Jonathan Nicholson; 202-862-9255 |
