D’Aquila to Quit Finance Post at Ailing Columbia S
James A. D’Aquila is resigning as chief financial officer at Columbia Savings & Loan, the Beverly Hills thrift struggling against huge losses as the value of its $3.8-billion junk bond portfolio tumbles. D’Aquila will join a Los Angeles investment firm controlled by former Treasury Secretary William E. Simon and Los Angeles lawyer Gerald Parsky.
Separately, Columbia announced that its 83-year-old founder and chairman emeritus, Abraham Spiegel, will return as chairman Monday when his son, Thomas Spiegel, steps down from that post.
Abraham Spiegel left the chairman’s post earlier this year. As previously announced, Columbia’s principal lawyer, Kenneth R. Heitz, will serve as interim chief executive after Thomas Spiegel leaves.
D’Aquila, who has been chief financial officer for less than a year, is the third top executive at Columbia to resign in recent months in the wake of federal legislation that devastated Columbia.
The law, part of the thrift bailout bill signed by President Bush in August, requires savings and loans to sell their high-yield, high-risk junk bonds by 1994. Since the legislation became law in August, junk bond prices have plunged because of problems with several major issues as well as general recession fears. This in turn caused the market value of Columbia’s portfolio to plunge by more than $700 million from its cost.
Earlier this month, Thomas Spiegel announced that he will resign to form an entity to allow Columbia to spin off its junk bonds. In September, Lawrence K. Fish left as president and chief operating officer.
D’Aquila, former West Coast director of Drexel Burnham Lambert’s financial institutions group, plans to leave Jan. 15. David A. Sachs, an executive vice president who runs Columbia’s investment operations, will assume D’Aquila’s job.
Columbia’s relationship with Drexel Burnham Lambert and its former junk bond wizard, Michael Milken, has been reviewed as part of a federal investigation into Drexel and Milken. Sachs was recently granted immunity in connection with the government investigation into Milken, who has been charged in New York on federal securities fraud and racketeering charges. Heitz said, however, that it is unlikely that Sachs will have to testify at Milken’s trial.
D’Aquila could not be reached for comment. In a statement, he said the decision to leave Columbia “in no way reflects any doubt in Columbia’s ability to reorganize and prosper in the current environment.” He plans to continue advising Columbia in its efforts to spin off the bonds.
Heitz said in an interview that Columbia expected some of its top executives to leave after the new law was passed because they are interested in working in investment activities that Columbia is now prohibited from doing. He said that D’Aquila is not leaving because of Columbia’s recent problems.
“I wouldn’t call it bailing out at all. He’s gotten a wonderful offer from the Parsky-Simon group,” Heitz said.
Columbia is hoping to package the junk bonds together in collateralized bond obligations, a new method that some are using to create investment-grade securities from junk bonds.
In an interview, Parsky said that the firm, WSGP, recently formed a fund with institutional money to buy collateralized bond obligations and that D’Aquila’s job will be in that field.
