Drexel blamed for much of S&L mess

November 16, 1990|By ASSOCIATD PRESS

NEW YORK (AP) -- Government regu lators for the first time have laid much of the blame for the savings and loan industry collapse on the junk bond dealings of Drexel Burnham Lambert Inc.

In a 60-page legal claim, federal thrift regulators accuse the failed investment firm of bribery, fraud, market manipulation and other serious crimes they allege hastened the demise of 48 savings and loan institutions, including Baltimore Federal Financial F.S.A. In the case of Baltimore Federal, the Federal Deposit Insurance Corp. and the Resolution Trust Corp. claimed $804,863 in junk bond losses.

The claim, which seeks $11.3 billion on behalf the thrifts, was released yesterday. A federal bankruptcy judge denied the government more time to investigate Drexel's junk bond dealings with other savings and loans.

In the case of Baltimore Federal, the Federal Deposit Insurance Corp. and the Resolution Trust Corp. claimed $804,863 in junk bond losses.

Baltimore Federal, one of the largest thrifts in Maryland, was taken over by federal regulators in February 1989. Last April, the RTC sold Baltimore Federal's $871.4 million worth of deposits to Household Bank FSB of Newport Beach, Calif. The federal government retained the thrift's assets, such as loans and other investments, and has since been trying to sell them.

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