NATION : Stay Lifted on S&L; Regulators

A federal appeals court today stayed a lower court order that had blocked the government from seizing an Illinois thrift institution and threatened to derail the massive savings and loan bailout.

The U.S. Court of Appeals said regulators could seize Olympic Savings and Loan Assn. of Berwyn, Ill. However, it barred the government from liquidating the thrift and selling its $1.1 billion in assets.

U.S. District Judge Royce C. Lamberth on Wednesday had issued a preliminary injunction blocking the takeover. He ruled that acting thrift office Director Salvatore R. Martoche and his predecessor, M. Danny Wall, were appointed unconstitutionally.

Government attorneys appealed, arguing that it was not in the public interest to bar regulators from taking Olympic. They said the injunction could delay President Bush’s S&L; bailout and cost millions of dollars by encouraging a flood of similar suits from other weak thrifts.

The appellate court agreed to hear the appeal and scheduled a hearing before a three-judge panel for April 11.