Bank Board Pledges $1.3 Billion in Rescue of 11 More Texas S
Federal regulators on Friday pledged $1.3 billion to rescue 11 insolvent savings associations in Texas, selling them to a cable television company.
The Federal Home Loan Bank Board said the Adam Corp. Group of Bryant, Tex., a cable-television station operator owned by Don A. Adam, is investing $65 million now and an additional $15 million by the end of 1990 to acquire the 11 institutions.
They are being merged under the name of Olney Savings & Loan Assn. All deposits, even those over the insurance limit of $100,000, are being transferred, the bank board said.
For the year to date, regulators have closed or merged 135 insolvent S&Ls; nationwide, 53 of them in Texas and Oklahoma. Those states were hard hit by the collapse of oil prices in 1986 and a subsequent break in real estate prices.
The Adam Group transaction is the ninth large rescue package in Texas since May, bringing total federal assistance to institutions in the state to $15.3 billion.
Many of the failures in Texas have been blamed on fraud and the abuse of the state’s regulatory system.
Rep. Doug Barnard (D-Ga.) said a study to be published next week by his House Government Operations subcommittee shows that three-quarters of all S&L; insolvencies appear to be linked in varying degrees to misconduct.
At the end of June, there were 7,350 pending federal criminal investigations involving 357 failed institutions and thousands of open institutions, Barnard said in a statement released by an aide.
The accelerating pace of S&L; closings and forced mergers by the bank board, which regulates the nation’s 3,000 thrift institutions, has spurred new debate in Congress on how to restore the industry to health.
The bank board has not acknowledged that it needs more money, but nearly all private analysts say its insurance fund will have to be bailed out, very possibly with taxpayer funds. So far, all of the money used in rescues has come from fees charged the industry.
Legislation creating a commission to study the problem and recommend a solution early next year is expected to pass Congress before it adjourns next week.
The government aid in the latest package is coming in the form of a $303 million, 10-year promissory note and an additional $1 billion in various kinds of guarantees against loss on the failed institutions’ bad loans.
Regulators said the $1.3 billion was the “present value” of the assistance, meaning that over time more could be paid out by the government, but it would be worth about that much if it were paid out all at once.
The Federal Savings and Loan Insurance Corp. will have a 20% ownership stake in the new Olney. At least 80% of any gains from the bad loans will go to the insurance funds, in addition to 60% of any tax benefits from the deal.
The 11 institutions being acquired by the Adam Corp. are:
Olney Savings Assn., Olney; First Federal Savings & Loan Assn., Amarillo; San Angelo Savings Assn., Abilene; Odessa Savings Assn., Odessa; Southwest Savings & Loan Assn., Abilene; Banc Home Savings Assn., Midland.
Also, Southern Savings & Loan Assn., Brownwood; Heart O’ Texas Savings Assn., San Saba; Shamrock Federal Savings Bank, Shamrock; Petroplex Savings Assn., Midland, and Security Federal Savings & Loan Assn., Pampa.
