Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 1, 1991 TAG: 9103010233
SECTION: VIRGINIA PAGE: B1 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: ABINGDON LENGTH: Medium
U.S. District Judge Glen Williams on Thursday set a hearing for April 24-26, saying he wants to decide Charter's suit as quickly as possible but questioning the urgency of a government takeover.
Three weeks ago, Charter asked for both a temporary restraining order and a permanent injunction against the Office of Thrift Supervision and the Federal Deposit Insurance Corp. to prohibit the appointment of a receiver for the Bristol-based thrift. An agreement reached Thursday continues a stipulation by the agencies that a receiver would not be named until the suit is heard.
"It's hard for me to see how a receiver can come in and operate better than the officers [of Charter] are doing," Williams said.
Charter said it feared that the government would take it over after the OTS rejected Charter's capital plan about a month ago. The major issue to be decided in April is Charter's claim that the government breached a contract by refusing to allow $48.2 million in good will to be considered among Charter's assets. That refusal led the OTS to disapprove its capital plan.
Charter says it contracted with the government in the early 1980s to set aside part of its assets as good will when the company agreed to take over three thrifts operating with negative net worth.
Harvey Levin, an OTS attorney, told Williams, "There has not been a rush to judgment" by naming a receiver for the company. Levin denied Charter's contract claim, saying "the facts are in dispute." He said a law Congress passed in 1989 changed the rules for good will.
Charter attorney James Jones said it was the bank's position that the government should have to "live by a contract like everybody else."
Felicia Chambers, a Department of Justice lawyer representing the FDIC, said the Charter case should be heard in a U.S. Claims Court in Washington, which deals with contract matters. In objecting to the U.S. District Court's jurisdiction, Chambers said she may ask for a transfer to the Claims Court or for dismissal of the case.
Last week, Charter said it failed to meet any of three capital ratio requirements of the government because it was not allowed to count good will as an asset. In the quarter ending Dec. 31, the bank said, it had reduced its net loss to $955,000 from a loss of $4.7 million in the same quarter a year ago.
In its capital plan, Charter has proposed reducing its expenses by 20 percent, to dispose of real estate and lower its assets and liabilities. This would meet federal requirements by 1994, the company said.
The attorneys for both OTS and the FDIC told Williams their agencies will not take over Charter before the issue of good will is decided, but they reserved the right to seek the court's permission to act if other reasons arise during the two months.
Buchanan, who won a good will case in Tennessee and is working on several others, said the central contract issue probably will be decided by the U.S. Supreme Court.
Many similar cases are in litigation, and Levin said more have been decided in favor of the financial institutions, but he had no figures.
by CNB