Sale of American’s Branches a Long Shot

It looks like federal thrift regulators will probably not be able to dismember troubled American Savings & Loan and sell its branches to its competitors after all.

Federal Home Loan Bank Board member Roger Martin told associates Friday that the proposal mostly likely will not fly, for tax reasons. “It’s now considered a long shot,” confirmed Karl Hoyle, a bank board spokesman.

Just last Wednesday, Martin met in Los Angeles with American Savings’ principal competitors to discuss the possible sale of American’s 185 branches statewide. At the meeting were representatives of California’s most profitable thrifts, which would be the most logical buyers.

American Savings’ parent company, Irvine-based Financial Corp. of America, now has a negative net worth due to a $468-million loss in 1987. And regulators are groping for solutions to its problems.

Martin had indicated that he thought it might make sense to sell the branches in bunches, along with FCA’s tax credits, which he valued at $700 million. In return, the acquiring thrifts would have to take some of American Savings’ problem loans.

But, according to spokesman Hoyle, “there is a serious question whether those tax benefits can be broken up” and sold in bunches.

Public discussion of the proposal “has caused consternation in our branch system,” an irritated William J. Popejoy, FCA’s chief executive, said Friday. “This whole approach never made sense to begin with.”