U. S. Takes Over Lincoln S & L : Seizure Follows Bankruptcy Filing by Parent Firm

Just one day after its parent company filed for bankruptcy, federal regulators seized Irvine-based Lincoln Savings & Loan Assn. today because it had “dissipated its assets through violations of regulations and laws.”

The thrift’s management, the Federal Home Loan Bank Board said, “appeared to operate Lincoln mainly for the benefit of (its parent company, American Continental Corp.) at the expense of (Lincoln).”

The thrift’s 29 Southern California offices remained open, and depositors can transact business as usual. Deposits up to $100,000 are insured by the Federal Savings & Loan Insurance Corp. Lincoln has total deposits of $4.4 billion in 176,323 accounts.

An oversight team led by the Federal Deposit Insurance Corp. began operating the $5.5-billion thrift at 7 a.m. today to “minimize losses, limit growth and ensure that operations are conducted in a safe and sound manner.”

Investors who own about $200 million worth of bonds may, however, lose some or all of their money as a result of American Continental’s filing Thursday for protection under Chapter 11 of the federal bankruptcy laws.

The company sold the bonds to customers in Lincoln’s branches.

Lincoln Savings & Loan, which represents about 85% of American’s assets, was not included in Thursday’s bankruptcy filing. But federal regulators said the filing did include substantial assets in subsidiary operations of Lincoln.

American Chairman Charles H. Keating Jr. said he filed for bankruptcy after federal regulators demanded he relinquish control of Lincoln.

American Continental has tried to sell Lincoln three times since last year. Federal regulators opposed the latest plan to sell Lincoln for $200 million to a group of investors led by John H. Rousselot, a former congressman from Arcadia, because the offer did not include sufficient cash.

Rousselot, named Lincoln’s chairman earlier this week, resigned today, regulators said.

The bank board named F. Roger Clark to serve as Lincoln’s chief executive. Clark ran Montfort Savings in Dallas after it was seized by regulators.