U.S. to Help Investors Buy 6 More Texas S
The Federal Home Loan Bank Board announced Friday the rescue of six more insolvent savings and loan associations in Texas by private investors in return for about $2.5 billion in federal assistance.
Meanwhile, the House Banking Committee, fearful that the crisis of hundreds of insolvent thrifts is growing beyond the bank board’s control, approved a bill creating a commission to study the problems of the S&L; industry.
The commission, if the bill creating it is enacted by Congress, would investigate whether taxpayer funds will be needed to dispose of the nation’s crippled S&Ls; and pay off depositors, whose funds up to $100,000 are guaranteed by federal insurance. The Senate has approved a different version of the S&L; commission, and advocates in both houses of Congress hope that a compromise measure can be approved next week.
The deals announced by the bank board Friday are the latest in a series of rapid-fire actions. The board this year has disposed of 123 troubled financial institutions by arranging for the purchase or merger of 103 of them and closing down the other 20.
Focus on Region
Although bank board officials say that they will have enough money from the funds they collect from healthy S&Ls; to deal with the industry’s problems, members of Congress are growing increasingly fearful that taxpayers will be called on to carry the burden.
Friday’s transactions are part of the bank board’s Southwest Plan, its effort, focused on Texas and Oklahoma, to revive the savings industry in the region. S&Ls; there are carrying billions of dollars in loans that are worthless or have just a small fraction of their original value because the local economy was devastated by falling oil prices and a collapsing real estate market.
The bank board said a group led by Temple-Inland Inc. will invest $128 million, the largest private capital infusion to date under the Southwest Plan, to acquire three institutions: Guaranty Federal of Dallas, First Federal of Austin and Delta Savings of Alvin. They will be combined in a new institution called Guaranty Federal.
Temple-Inland, a firm based in the east Texas town of Diboll and which makes pulp and paper products, will own 80%. The other partners in the venture, Trammel Crow Co. and Mason Best Co., will have 10% each.
The Federal Savings and Loan Insurance Corp. will provide assistance worth $1.49 billion, including a note for $710 million. The remaining aid represents the bank board estimates of the potential cost of its promise to reimburse the new owners for any losses they might suffer on the bad loans they are acquiring along with the S&Ls.;
FSLIC will receive 20% of the dividends the institution will pay if it becomes profitable.
Other Rescue Deals
“The millions of dollars in capital being invested in this transaction proves again the Texas thrift market is attractive to investors as an excellent business opportunity,” said bank board Chairman M. Danny Wall. “More and more investors want to participate in our plan because it will be profitable for them, and the Southwest Plan is key to restoring the Texas thrift industry to health.”
In the other Southwest Plan transaction, Club Corp. International of Dallas, which operates private dining and country clubs, will acquire three Austin S&Ls;: CreditBanc Savings, Franklin Savings and Great West Savings. Club will provide $25 million in capital, and the federal regulators are providing an aid package worth $999.5 million, including a note for $264.4 million.
In a separate, and much smaller, S&L; rescue operation announced Friday by the bank board, First Federal Bank of Vincennes, Ind., acquired insolvent United Savings Assn. of Central Indiana, of Tipton, Ind., with a total of $9.3 million in federal assistance.
FSLIC will receive 80% of any tax benefits from United’s net operating losses. First Federal is a $175.5 million federal savings institution.
