Glendale Hearing.
Patrick, this is what I got off the wires.
Thursday August 1 3:20 PM EDT
Damages Trial in Glendale Federal Bank's Lawsuit Against
Federal Government to Begin January 13, 1997
GLENDALE, Calif., Aug. 1 /PRNewswire/ -- Glendale Federal Bank (NYSE: GLN) today said that
Chief Judge Loren A. Smith of the U.S. Court of Federal Claims has scheduled January 13, 1997 as the
starting date for a trial to determine the amount of damages due to the bank in its lawsuit against the
federal government. The judge set the January 13, 1997 date during a status conference held today in
Washington D.C.
The damages trial is the second phase of the litigation. In the first phase, the United States Supreme
Court affirmed lower court rulings that the federal government had breached its contract with Glendale
Federal and was therefore liable to the bank for damages.
Stephen J. Trafton, chairman and chief executive officer of Glendale Federal Bank, said, "We are pleased
that Judge Smith has ordered an expeditious schedule for the beginning of the damages trial. This action
recognizes the unique position of the bank as the only operating company to have obtained a final
judgment of the government's liability.
"With this trial scheduled, the government must end its six-year record of foot dragging and delay.
Because of the government's breach of contract, Glendale Federal suffered tremendous harm and was
very nearly destroyed. We are prepared to present documentation of the damages suffered by the bank as
a direct result of the government's action."
Glendale Federal's lawsuit stems from a 1981 agreement in which the bank relieved the government of a
$783 million potential liability by merging with a failing Florida thrift. In exchange, the government
promised the bank that it could include the goodwill created by the merger as capital, to be amortized over
40 years. But in 1989, the government reneged on its promise and required that the goodwill be eliminated
in five years.
As a result, Glendale Federal suffered a huge loss of its earnings power as a large portion of its capital
account was defined away by legislative action, which the Supreme Court held was a breach of contract.
That breach also forced the bank into a costly restructuring, including the sale of profitable operations and
a massive recapitalization.
Glendale Federal bank is one of the largest savings institutions in the United States, serving the
business and community banking needs of Californians through 150 banking offices and 22 loan offices. |
