BANKING/FINANCE
Regulators criticized: Meanwhile, a federal Bankruptcy Court judge in Phoenix has criticized federal regulators for making “one error after another” in managing a deal involving one of 11 bankrupt subsidiaries of Lincoln Savings.
Judge Sarah Sharer Curley said late Monday that regulators made an “incomplete analysis of problems” in overseeing a $10.5-million line of credit to Sterling Homes Design Inc., a Sacramento builder that was constructing a tract of homes with the Lincoln subsidiary, Phoenician Commercial Properties, as an equal partner.
Curley said she plans to look into the government’s management of Phoenician Commercial.
American Continental put the 11 subsidiaries into bankruptcy when it filed for court protection last April. Curley, however, gave the government control of the subsidiaries, which represented about two-thirds of Lincoln’s $5.3 billion in assets at the time of the takeover.
Charles H. Keating Jr., American Continental’s chairman, has contended throughout the bankruptcy proceedings that government regulators are not business people and are not capable of managing Lincoln’s complex and wide-ranging business.
James J. Feder, a Los Angeles lawyer for American Continental, said he will ask Curley for permission to sue the government to recover what he estimates is $2.9 million to $3.3 million in lost profits resulting from regulatory mismanagement.
