Federal Bank Board to Consider Costly Breakup Plan for FCA

The Federal Home Loan Bank Board will consider a plan to break up and sell troubled Financial Corp. of America, parent company of the nation’s largest savings and loan institution, board member Roger Martin said Friday.

FCA officials estimate that the plan would cost the Federal Savings and Loan Insurance Corp. between $1.2 billion and $2 billion over 10 years, said Martin, who met Monday with officials at FCA headquarters in Irvine.

It will be presented to the bank board in a private meeting Sept. 28. At the same time, Ford Motor’s thrift unit, First Nationwide Bank of San Francisco, is moving ahead with plans to make an offer for FCA, he said.

But the Ford plan involves FSLIC guarantees for future loan and interest rate losses and could require $3 billion to $4 billion in federal assistance over five years, said Martin, the newest member of the three-member bank board.

He said it would take the board at least three or four weeks to evaluate the proposal.

“On the surface, it looks awfully good but there’s a lot of things that have to be done to get the rabbit over the fence,” he said. “In the final analysis, we have to make the best economic decision for the FSLIC.”

The plan involves breaking FCA into four units, including one that would include valuable tax benefits, which the new tax law permits troubled S&Ls; to sell. The Internal Revenue Service would have to approve the details.

William Popejoy, chairman and chief executive of FCA, called the plan “a research project.” He described it as “. . . a long shot, in my estimation” and said it had cost “hundreds of thousands of dollars” to prepare.