Two small Southern California savings and loans were taken over Thursday by federal authorities, officials announced.
The two insolvent institutions are Sierra Federal Savings, a one-office savings and loan on North Roxbury Drive in Beverly Hills with $49 million in assets, and American Interstate Savings, which has its corporate headquarters in Costa Mesa and operates a single office on South Figueroa in Los Angeles. American Interstate Savings has $27 million in assets.
The savings and loans were among seven institutions in California, Florida, Illinois, Louisiana, New Mexico and Tennessee that were placed in conservatorship Thursday as part of a joint regulatory program by the Federal Savings and Loan Insurance Corp., the federal agency that insures deposits at member thrifts, and the Federal Deposit Insurance Corp., which backs funds on deposit in member commercial banks.
The moves were taken in preparation for expected congressional passage of a massive savings and loan bailout. By putting the institutions into conservatorship, the government is seeking to minimize losses and limit risk until Congress provides the money to close them or subsidize their sale.
The government transformed the seized S&Ls; into new mutual associations, effectively wiping out any subordinated debt and stockholder positions. For unexplained reasons, Sierra Federal's name will be changed to Clover Federal Savings & Loan; the Costa Mesa thrift will remain American Interstate Savings.
Terry Williams, a spokesman for the Federal Home Loan Bank Board, said depositors are unaffected by the action. He said neither of the two California institutions have a very active retail business but instead cater to money brokers, who place large amounts of money in institutions that offer high "jumbo" rates.