Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : Ambase Corp. (abcp) -- Ignore unavailable to you. Want to Upgrade?

To: Amy Feller who wrote (35)	10/30/1998 12:10:00 AM
From: Amy Feller	Read Replies (1) \| Respond to of 43

U.S. Budget Fully Funds Payments for S&L 'Goodwill' Lawsuits Washington, Oct. 29 (Bloomberg) -- The U.S. government has adopted a plan for paying an estimated $30 billion in claims arising from the savings and loan crisis. Buried in the $500 billion 1999 federal budget deal is an agreement that gives the government the funds it needs to settle or pay court-ordered judgments in lawsuits brought by more than 100 thrifts in a dispute over accounting treatment of mergers in the 1980s. Congress formally established what one lobbyist described as an open-end line of financing to the Federal Savings and Loan Insurance Corp. Resolution Fund for the lawsuits. Up to this point, it was unclear whether Congress would act to free up funds to pay claims from lawsuits over so-called ''goodwill'' accounting treatment. The FSLIC fund was created in 1989 to assume the obligations of the insolvent thrift insurance fund that failed amid the S&L crisis. This account will pay claims resulting from court verdicts or to resolve out-of-court settlements, said Robert Davis, director of economics and research at America's Community Bankers, an S&L trade group in Washington. The U.S. government already has a similar financing arrangement with a separate settlement fund to pay claims when Uncle Sam loses court cases with businesses and individuals. ''What they have, in essence, established is a parallel judgment fund,'' said Davis. Treasury Department spokesman John Longbrake said the funding source is ''an indefinite amount'' with ''no fixed dollar amount.'' The language in the Justice Department's 1999 budget says ''such sums as may be necessary'' will be set aside to pay claims ''in suits against the United States arising from the Financial Institutions Reforms, Recovery and Enforcement Act,'' commonly known as the 1989 S&L bailout law. ''Congress has said it stands behind the fund, so people need not be worried that there won't be enough money to pay judgments, should it become necessary,'' said David Cohen, the Justice Department's top lawyer on the goodwill cases. Numerous Lawsuits The dispute involves numerous breach of contract lawsuits in which savings and loans claim the government reneged on a key agreement about the accounting treatment of takeovers of ailing thrifts. These takeovers were actively encouraged by government regulators. The S&Ls argue the government broke an agreement to let thrifts count as capital part of the premium, called ''supervisory goodwill,'' from takeovers of ailing S&Ls. The accounting change led to tremendous losses for many S&Ls. California Federal Bank, for example, was forced to write off $485 million in goodwill after the government changed accounting rules. The decision by Congress to provide open-ended financing for the claims was hailed by Edward Sisson, a Washington, D.C. lawyer who's coordinating the 120 goodwill lawsuits. ''The Congress came through,'' Sisson said. He was concerned that federal agencies, after fighting the lawsuits aggressively in court, would then tell the thrifts to persuade Congress to pass a spending bill to cover the politically unpopular payments. ''I think they are stepping up to the plate to say that if there are judgments or settlements, they really will pay them,'' he said. ''This is good government in action.'' The Federal Deposit Insurance Corp., which runs the FSLIC fund, said it has paid out $104 million for settlements as of June 30. Also set aside in the budget was $51 million to the Justice Department to litigate the S&L accounting cases.