The Supreme Court ruled today that creditors of failed savings and loan associations may sue those institutions without first waiting for any action from the Federal Home Loan Bank Board.
In a significant victory for the thousands of creditors owed billions by failed S&Ls; nationwide, the court said federal courts may hear such lawsuits before the bank board, the federal agency that regulates the industry, takes any action.
The 9-0 ruling rejuvenated a $113-million federal court claim made by a Texas land deals group against an Arkansas-based S&L.;
In an opinion by Justice Sandra Day O’Connor, the court said federal courts--and not the Federal Savings Loan Insurance Corp.--have the initial authority to review disputes between failed S&Ls; and their creditors.
“We hold that Congress did not grant FSLIC such (exclusive) power and that the creditors of a failed savings and loan association are entitled to . . . consideration of their claims in court,” O’Connor said.