BANKING/FINANCE : Feds Checked Into Hotel Owned by Lincoln Savings Before Seizing S

Federal regulators inadvertently tipped their hand that they were preparing to seize Lincoln Savings & Loan in Irvine 2 weeks ago.

Before the April 14 seizure, a large force of examiners and other staff members from out of town checked into hotel rooms in Phoenix, where Lincoln’s parent, American Continental Corp., is located. The company maintains a Lincoln administrative operation in an adjacent building.

Regulators booked a number of rooms at the Crescent Hotel, which is 55% owned by Lincoln. It also represents one of the major flash points in the bitter controversy between regulators and S&L; leaders over Lincoln’s direct investments.

On Wednesday, April 12, American Continental’s boss, Charles H. Keating Jr., learned of the hotel reservations, said Mark M. Connally, a company spokesman.

The next day, American Continental put itself and 11 of Lincoln’s 35 subsidiaries under U.S. Bankruptcy Court protection. That Friday, regulators seized Lincoln for alleged “unsafe and unsound” practices and put it into a conservatorship.

American Continental maintains that the timing was purely coincidental.

“The move to file for protection from creditors was based on demands by regulators to execute certain agreements--or else,” Connally said.

Regulators also don’t believe that Keating’s knowledge of the reservations had much to do with the sequence of events. They were prepared to take over the institution after Keating refused to sign the agreements on Wednesday, a regulatory spokesman said. The bankruptcy just gave them a better excuse to seize the S&L.;

Besides, another spokesman said, “our people had to stay somewhere.”