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American Savings Says It Sold All Junk Bonds

TIMES STAFF WRITER

American Savings Bank confirmed Friday that it has finished liquidating its portfolio of junk bonds, an ill-timed investment that it made just before the market for the risky securities tumbled last year.

The Stockton thrift, taken over by Texas investor Robert M. Bass in a federal bailout in late 1988, bought the high-yield bonds last spring and summer. At one point, it had accumulated nearly $500 million worth.

But fears of recession and problems with some bonds--among them those issued by the retail empire of Canadian businessman Robert Campeau, which American bought--caused the junk bond market to plunge. Also hurting the market was new federal legislation requiring that thrifts sell their bonds by 1994.

Last year, American set aside $65 million for junk bond losses and started selling its portfolio. Overall, its junk bond losses are believed to be about $100 million. An American spokesman confirmed that the thrift finished selling the bonds in April but declined further comment.

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The junk bond venture was one of the few missteps for Bass in the first year he owned American, now considered one of California’s healthiest thrifts.

Even with its junk-bond problems, American earned $214.2 million in 1989, more than any other thrift in the nation.


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