Friday Is Takeover Day
Friday evenings typically are known as getaway nights, heralding the weekend.
But for those who like to keep tabs on the ever-changing financial services industry, Fridays are quickly becoming known as takeover nights.
Twice in the last three weeks, there have been regulator-ordered management shake-ups at savings and loans in Southern California--Central Savings & Loan in San Diego and Southern California Savings & Loan in Beverly Hills.
There is a lot of logic to takeovers and government-mandated shake-ups on Friday, according to regulators.
“It gives us time over the weekend to get everything organized so we can open on Monday morning,” said a government regulator.
“And it gives time to work out the deposit situation.”
Moreover, it could have the “psychological effect” of giving customers a weekend to “understand what happened and know that their accounts are insured.”
Given the shakeout in the industry--43 U.S. banks have failed this year and three savings and loans in California have either been taken over or have gone through a management upheaval--Friday evening events could make for interesting Saturday reading for some time to come.
Feds Into Real Estate?
Carroll Davis’ bid to refinance his Radisson Hotel in Mission Valley continues, with a Wednesday foreclosure sale deadline if a deal can’t be made.
Federal regulators are reportedly still considering his offer to pay about 62% of his $27.5 million in defaulted construction loans up front.
The Federal Savings & Loan Insurance Corp. would receive a trust deed on the hotel for the balance of the loan.
The refinancing proposal has been weeks in the making, primarily because FSLIC officials aren’t really sure they want to go into the real estate business by taking back paper on the Radisson.
The loans were made by San Marino Savings & Loan. When regulators seized control of the S&L; in December, they also assumed control over the company’s loans.
Davis’ case may be precedent setting. “The FSLIC may not want to become trust deed holders,” said one attorney involved in the negotiations.
“They don’t want to get into the building business.”
Of course, the FSLIC’s alternative does just that: If regulators foreclose on the Radisson, they are stuck with a hotel that must be sold.