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To: Goodboy who wrote (32)	6/24/1998 12:37:00 AM
From: Amy Feller	Read Replies (1) \| Respond to of 43

Here are the details according to Bloomberg: Conseco Unit Wins $39 Mln U.S. Goodwill Settlement Washington, June 23 (Bloomberg) -- The U.S. government agreed to a $39 million settlement involving a thrift acquired by Conseco Inc. that may mark a turning point in cases involving billions of dollars in claims arising from the savings and loan cleanup in the early 1990s. The agreement includes a payment of $9 million in cash, most of which will go to former shareholders of Statesman Savings Holding Corp., bought by Conseco, a Carmel, Indiana-based insurance company. The settlement is designed to compensate shareholders for investments lost when the thrift failed in 1990 following changes in federal capital rules, Justice Department lawyer David Cohen said. The settlement could buoy hopes of other investor groups, including shareholders in publicly traded Meritor Savings Bank and AmBase Corp., for a large payout on their claims against the government. The U.S. faces about 120 lawsuits in the U.S. Court of Federal Claims in Washington seeking as much as $30 billion in damages over the federal accounting rule change, which wiped out a paper asset known as supervisory goodwill, contributing to losses or bankruptcies at the thrifts. This is small in dollar terms, but it's important because cash is actually going to change hands,'' said Caren Mayer, an analyst with NationsBanc Montgomery Securities. First of Its Kind That could be important because the Conseco settlement is the first publicly announced payment by the government involving the pending Court of Federal Claims cases. Cohen, who is supervising the government's defense in thrift lawsuits, said he has ''tentative agreements'' in three other cases, which he wouldn't name. The Justice Department reached agreement with Statesman late last Thursday, Cohen said when asked the status of the talks. Statesman's claim concerns stock and cash the Des Moines, Iowa-based thrift invested when it took over four troubled thrifts in 1988 at the urging of the federal government. Conseco acquired an interest in the claims against the government when it acquired Statesman Group Inc. in 1994 as part of a large insurance company acquisition. In addition to the $9 million cash payment, the government won't seek redemption of preferred Statesman shares owned by the Federal Deposit Insurance Corp., Cohen said. Those shares were valued at about $30 million in 1994. Conseco declined to comment on the case. It's stock rose 1 5/16 to 46 9/16. Shares of some thrifts or their successors with pending breach-of-contract claims also rose. AmBase rose .1512 to 3.12. Meritor rose 1/8 to 3 1/8. Other goodwill-related securities fell. Analysts said the declines reflected concerns that the Statesman's settlement falls short of other thrift's goodwill-related claims. Golden State Bancorp Inc. and other thrifts are asking for damages and compensation for lost profits in addition to restitution for lost investments. Golden State Bancorp Litigation Tracking Warrants fell 3/16 to 5 5/16. Coast Federal Litigation Certificates fell 7/16 to 14 5/8. California Federal Z-Series Goodwill Certificates fell 3/4 to 20 3/4. Charles Cooper, the attorney representing Statesman's former owners, called the settlement ''an encouraging sign that the government, at least in this case, stepped up to the line.'' Statesman's Situation The settlement reflects the Statesman's particular situation and can't necessarily be applied in other cases, Cooper cautioned. I don't think anyone can look at this as providing a sweeping template,'' he said. In the 1980s, with scores of thrifts failing, the government persuaded stronger institutions to buy weaker ones. The legal claims of Statesman and other thrifts concern the government's promise to let them count premiums paid in these acquisitions as a form of capital, known as supervisory goodwill. In other cases, the government provided cash that could be counted as capital, called capital credits. Lost Profits Claim In 1989, Congress ordered a quick phase-out of supervisory goodwill, a move that sent dozens of thrifts into insolvency, leading to federal takeovers. Since then, owners of failed thrifts have won a series of court fights, including a 1996 Supreme Court decision that the federal government breached contracts with Golden State Bancorp Inc., Statesman and another thrift. Statesman originally asked for $135 million in damages. The company had to lower its sights after a federal judge in April sharply restricted its right to recover for ''lost profits'' --a measure of the money the thrift says it would have earned had Congress not banned supervisory goodwill. Investors cheered the settlement. This has major implications for all the goodwill suits,'' said Allan Bortel, manager of California-based Inverness Partners, which holds goodwill-related securities of Golden State Bancorp Inc. and Coast Savings Financial Inc. ''The government finally admitted that the institutions were damaged. Both the institutions and their shareholders stand to gain.'' A trial on damages to be awarded Golden State's bid for $1.8 billion, perhaps the largest of the goodwill cases, concluded earlier this year. A decision is expected later this year. U.S. Claims Court Judge Loren Smith already has said that Golden State, unlike Statesman, can recover for lost profits.