Ex-Mercury S&L; Chairman Sues for Retirement Benefits

Leonard Shane, the former chairman and chief executive of Mercury Savings & Loan, filed a lawsuit Tuesday against the troubled Huntington Beach thrift and the federal agency that runs it, seeking $850,000 in retirement benefits.

Shane, ousted Feb. 23 when regulators seized the insolvent institution, claims in a federal court suit in Los Angeles that he is one of “certain key employees” who became entitled to retirement plan benefits. Shane, 67, was fully vested in the plan by last November, the suit said.

The suit, which also seeks interest on the amount due, names as defendants Mercury and the Resolution Trust Corp., which was named as conservator for Mercury. The S&L; had a little more than $2.1 billion in assets when it was seized.

Shane was one of the thrift industry’s more colorful and articulate leaders as chairman of the then-powerful U.S. League of Savings Institutions trade group in 1982 when Congress was granting new authority to S&Ls; for a wide array of investments.

But Shane preached the American dream of home ownership and railed against thrift operators who would presumably endanger the S&L; deposit insurance system with such risky investments as windmill farms, hamburger stands, undeveloped land and high-yield, high-risk corporate securities, known as junk bonds.

He prided himself on the fact that Mercury never bought any junk bonds or invested in anything but mortgages.

But for much of the last decade, Mercury’s capital level was barely above the minimum federal requirements. Under federal law enacted in August to bail out the deposit insurance system, Mercury failed the tough new tests for capital, and writedowns on two major hotel loans put it in red ink.