BANKING/FINANCE
Three years ago, when regulators seized the now defunct American Diversified Savings Bank in Costa Mesa, they hired a management team from nearby Pacific Savings Bank to manage American Diversified while they tried to figure out what to do with the failed operation.
Less than 6 months later, Pacific Savings bowed out of the arrangement as its problems began to surface. Regulators installed new management 20 months ago and, on Feb. 7, put Pacific Savings into receivership.
For the record:
12:00 a.m. Feb. 17, 1989 FOR THE RECORD
Los Angeles Times Friday February 17, 1989 Orange County Edition Business Part 4 Page 6 Column 5 Financial Desk 1 inches; 26 words Type of Material: Correction
A story in Wednesday’s Briefcase column incorrectly stated that Pacific Savings Bank in Costa Mesa was in receivership. In fact, federal regulators have put it in conservatorship.
Now, another institution that picked up the pieces of the failed Ramona Savings & Loan in Orange has succumbed to regulatory authority. Midwest Federal Savings & Loan in Minneapolis, with $3.4 billion in assets and $2.3 billion in deposits, was put into conservatorship this week by federal regulators.
Midwest executives said they had big plans to move into the California market through the $5.6-million purchase of Ramona’s assets last year. But Midwest never got beyond changing the names on the offices in Orange and Fillmore.
Auditors recently found so many assets that needed to be written off that Midwest Savings was left without any capital, which is its reserve against losses. Regulators determined that it was insolvent and moved in.
Top managers resigned, and no one could be reached to comment on whether the purchase of Ramona, along with similar purchases of S&L; assets in Iowa and Oklahoma, was partly to blame for the failure of Midwest.
The FBI has initiated a criminal investigation into possible fraud at the S&L.;
