Feds try to ban S&L's Keating Regulators also target 6 others.

July 01, 1991|By Los Angeles Times

LOS ANGELES ' — LOS ANGELES -- Federal savings and loan regulators take on their biggest enforcement action today as they try to ban Charles Keating Jr. and six others from the industry and recover $130.5 million in losses on four Lincoln Savings & Loan deals.

The administrative hearing sought by the Office of Thrift Supervision also marks the first time that any of the government agencies or private investors arrayed against the operators of the thrift from Irvine, Calif., will have a chance to prove their case in a trial-like hearing.

The OTS, which regulates the nation's S&Ls, has reserved a courtroom in Los Angeles County Superior Court for eight days over the next two weeks. Both the agency and lawyers for the defendants expect the hearing to go on for much longer.

Proposed witnesses alone number 45 for the government and at least 59 for Keating, including Federal Reserve Board chairman Alan Greenspan, former Federal Home Loan Bank Board chairman Edwin J. Gray and William Seidman, chairman of the Federal Deposit Insurance Corp.

Regulators seized Lincoln in April 1989, a day after its parent company, American Continental Corp. in Phoenix, filed for bankruptcy. Lincoln's failure is expected to cost taxpayers $2.6 billion, the largest single bill for a failed thrift. In addition, thousands of American Continental bondholders lost more than $250 million.

Federal prosecutors are expected to be watching the OTS proceedings carefully because the four accusations against the Keating group involve transactions that also are major parts of their 2-year-long grand jury investigation into Lincoln's collapse, say sources close to the case.

The U.S. Department of Justice, they say, was so concerned that an OTS hearing would disclose secret grand jury testimony that it asked the thrift agency to delay the proceeding. Spokesmen for both agencies refuse to comment about any interagency pressure being applied.

The hearing was scheduled to start last Monday but was delayed a week at the request of a retired federal judge who was presiding over settlement talks involving a tangle of civil cases that have been consolidated in Phoenix.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.