ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, July 2, 1996 TAG: 9607020050
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
A Supreme Court victory for savings and loans Monday could shower billions of dollars on an industry that has recovered from years of failures and may be looking for acquisitions.
Those left standing after the S&L crisis are relatively strong and a far cry from the insolvent institutions that were closed down by the government.
``The thing that has changed dramatically since the early '90s is the fact that the industry now is quite well-capitalized,'' said Jim Large, chairman of Dime Bancorp Inc. in New York, the nation's fifth-largest publicly traded thrift.
``The real problem now is what the industry is likely to do with the money,'' Large said. ``It's possible that thrifts that now have more cash than they know what to do with will be more active in the acquisitions market.''
The Supreme Court ruled that the federal government could be made to compensate three thrifts for a 1989 accounting rule change that thrust the entire industry into financial chaos.
The Senate Budget Committee has allocated $9 billion in federal funds for fiscal year 1997 to compensate thrifts. But industry insiders said payments could end up totaling more than twice that amount to 120 thrifts that have similar lawsuits pending.
At least half of the 120 thrifts that sued are not even operating any more. But for the ones that failed because of the rule change, the owners now may get their money back.
``This decision is a complete home run for investors who were white knights and rescued failing institutions to save the [federal government] money,'' said Dan J. Goldberg, an attorney with Reinhart, Boerner, VanDueren, Norris & Rieselbach. P.C. in Washington, D.C. who represented a dozen thrifts that sued.
Goldberg said the decision should increase the amount of money that thrifts are allowed to count as regulatory capital, which can then be leveraged to raise money for acquisitions.
Of the thrifts directly affected by the Court's ruling, Winstar Corp. of Minnesota, Statesman Savings Holding Group of Iowa and Glendale Federal Bank of California, only Glendale is still operating.
Glendale stock was up $1.25 at $19.371/2 on the New York Stock Exchange. Dime was up 12.5 cents at $13.371/2 on the NYSE.
It could be years before thrifts or investors see hard cash. The high-court ruling requires the plaintiffs to return to the U.S. Court of Federal Claims in Washington, D.C., individually to establish damages, unless a settlement negotiated for all of them.
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