Bank Board Hit on Bidding for American S
The president of First Nationwide Bank complained to a congressional panel Tuesday that his institution should not have been frozen out of negotiations in the largest government rescue of a savings association.
Robert E. Lackovic, president of the San Francisco-based First Nationwide, told the House energy and commerce oversight subcommittee that federal regulators cannot be sure that they got the best deal in the rescue of American Savings & Loan Assn. of Stockton because regulators had negotiated exclusively since April with the investors who were eventually chosen to take over American.
The Federal Home Loan Bank Board announced Sept. 5 that it was providing $2 billion in government assistance to the Robert M. Bass Group of Ft. Worth to acquire American, the largest insolvent S&L; in the nation. Bass, in its first venture into the savings industry, is putting up $550 million.
First Nationwide, a subsidiary of Ford Motor Co., had unsuccessfully tried through most of 1987 and early this year to close a deal with the bank board. As the government’s negotiations with Bass continued, First Nationwide failed in attempts to get back in the running.
“First Nationwide cannot help but be disappointed in the outcome of negotiations. Had we been given the opportunity to remain in the bidding, the outcome may have been the same, but the uncertainty as to whether the government indeed had accepted the best bid would have been eliminated,” Lackovic told the subcommittee chaired by Rep. John D. Dingell, (D-Mich.).
Lackovic also criticized a provision of the Bass deal that permits the investment group to use $1.5 billion of American’s resources for a merchant bank to invest in corporate takeovers and other ventures not traditional for savings institutions.
“We do not believe that (Congress’) intent was to permit . . . a merchant bank to use low-cost funds from savings and loan institutions,” he said. “In many instances, the troubled thrifts are the ones that deviated widely from their traditional role and have engaged in highly risky investments.”