Simon Intervention in S&L; Dispute Told : Financial scandal: Senator reportedly helped initiate settlement for developer who owed millions to troubled thrift.

Sen. Paul Simon (D-Ill.), a frequent critic of the government’s handling of the savings and loan crisis, reportedly helped a developer last month who owed millions of dollars to a troubled thrift.

The Chicago Sun-Times today in a copyright story reported that after Simon approached thrift officials on behalf of the developer--a longtime Simon supporter--talks got under way and the S&L; now is in the final steps of working out a negotiated settlement to a lawsuit it filed against the developer.

Simon told reporters today he did nothing wrong.

“I did the same thing that I did for thousands of other citizens,” Simon said. “I did not pretend to know any of the details.”

Simon told the newspaper he was unaware that he was intervening in a matter that involved a troubled savings and loan and did nothing improper. The thrift’s officials said Simon’s call did not influence their actions.

Simon asked the president of First Nationwide Financial Corp. in San Francisco to work out an agreement with Stephen Ballis, who owes $5 million to the institution, the newspaper said.

First Nationwide received taxpayer help recently to buy Pathway Financial of Chicago, which was the second-largest troubled savings and loan in Illinois until it was bailed out by the government at the end of 1988.

Ballis’ company, Dayton Resources, defaulted on a Pathway loan used to build a 19-unit condominium complex, the newspaper said.

First Nationwide then sued to foreclose on the property and have Ballis replaced by a court-appointed receiver. The S&L; has now nearly finalized a negotiated settlement to that lawsuit, the newspaper said.

After meeting with Ballis in Chicago this summer, Simon said he called First Nationwide’s president. During the conversation, Simon said he told the president he didn’t know the details of the dispute, “but costly litigation could be avoided if they sat down with (Ballis) and worked things out.”

“I just said, ‘Take a look at it. You can save a lot of money,’ ” Simon recalled. “I did not push anyone to do anything improper, and I would not do that.”

First Nationwide President John Devine said the call prompted him to look into the Dayton Resources loan but did not influence the way the S&L; handled the case.