Former State S&L; Chief to Take Over Failed Mercury

William J. Crawford, who retired in April as state S&L; commissioner, will be placed in charge of insolvent Mercury Savings & Loan Assn. today, an official with the federal regulators said Tuesday.

Kevin Shields, a spokesman for the Resolution Trust Corp.’s regional office in Denver, said Crawford will be named managing agent of Mercury, which was seized by federal regulators in February. The S&L; currently has about $2 billion in assets.

The RTC is the government agency charged with liquidating the assets of insolvent S&Ls.; Shields said the managing agent’s job is to run the day-to-day operations of ailing thrifts, sprucing them up as much as possible before selling them for the best price.

Crawford, 70, owned and sold two different S&Ls; before being named to the top state regulatory post in 1985. The Newport Beach resident, who cited his age and a desire to travel with his wife as the reason for his resignation from the state post, declined comment Tuesday.

In his 5 years as state S&L; commissioner, Crawford developed a reputation as a blunt-spoken, tough regulator. His small staff identified severe abuses at several S&Ls; in the state, and for a time Crawford’s department was running ahead of federal regulators as it moved against the offenders.

The state agency acted in advance of federal regulators in seizing North American S&L; in Santa Ana--an institution that Crawford said represented the worst case of insider fraud in state history. Crawford also cracked down on the defunct Ramona S&L; in Orange months before federal regulators filed criminal fraud and conspiracy charges against owner John L. Molinaro and former co-owner Donald C. Mangano. The two received stiff prison sentences earlier this year.

Shields said Crawford has been training at Mercury S&L; since July 2. He said Crawford originally was slated to take over insolvent Southwest Federal Savings Assn. in Los Angeles, but those plans were changed Monday. Crawford will replace another RTC official at Mercury.

Mercury Savings was founded in 1964 by a group of local investors headed by Leonard Shane.

Shane, who served as Mercury’s chairman from the beginning, rode the housing boom into prominence, building Mercury into a nearly $5-billion institution in the mid-1980s and becoming chairman of the national thrift industry trade group, the once-powerful U.S. League of Savings.

For years, the S&L; was held up nationally as a shining example of a well-run, conservative S&L.; But accounting rules allowed Mercury and other thrifts to count as current income certain profits expected to come in from the collection of mortgage payments for investors who bought the loans it originated.

When dropping interest rates in the late 1980s enabled a large number of borrowers to refinance and pay off those loans early, Mercury had to write off the profits it had already booked and sustained huge losses that helped drive it into insolvency.