Federal regulators tried to apply some unusual pressure on the wealthy Belzberg brothers of Canada in an effort to stop FarWest Savings from going under, said one source familiar with negotiations before the Newport Beach thrift was seized last Friday.
The Office of Thrift Supervision, the source said, suggested that the brothers might find it difficult to win approval for operating regulated companies in the United States if they washed their hands of the Newport Beach thrift. Foreigners investing in this country are typically subject to more scrutiny than are U.S. citizens.
Samuel, Hyman and William Belzberg, who earned millions of dollars from corporate takeover attempts in the 1970s and 1980s, already had started a company in another regulated industry.
In September, they opened First Environmental Review Insurance Co. in Long Beach to provide real estate buyers with coverage against possible environmental difficulties on their purchased property. The company is a subsidiary of the Belzbergs’ First City Financial in Vancouver.
Neither regulators nor a spokesman for the Belzbergs would comment.
Talks between OTS and the Belzbergs certainly didn’t stop the brothers from walking away from their majority stake in the savings and loan, leaving U.S. taxpayers with a cleanup bill estimated at $500 million.