S&L; Regulators Ban Keating from Banking Industry : Finance: Ex-operator of Irvine-based Lincoln ordered to pay $36 million in restitution. Losses are estimated at $2.6 billion.

Federal thrift regulators on Tuesday banned former Lincoln Savings & Loan operator Charles H. Keating Jr. from the banking industry and ordered him to pay $36 million in restitution for two illegal dealings at the failed Irvine thrift.

The action by the Office of Thrift Supervision ended three years of hearings and legal maneuverings involving Keating and other executives at Lincoln, which collapsed in April, 1989, and became one of the industry’s costliest thrift failures. Keating, whose company owned the S&L;, is serving prison terms for a securities fraud conviction in state court and for racketeering, conspiracy and fraud convictions in federal court.

The OTS, which regulates the S&L; industry, initiated action against Keating and six associates in August, 1990. The others settled previously. Keating, however, sought a new hearing, saying that he would be willing to testify. He had refused to testify previously to safeguard against self-incrimination, but his convictions now render that privilege moot.

OTS Acting Director Jonathan Fiechter, however, denied the request, ruling that Keating already had a chance to testify.

The agency had sought as much as $130.5 million in its biggest enforcement action yet, but it streamlined its case after the Resolution Trust Corp., the federal agency liquidating Lincoln, included some of its claims in a lawsuit that also sought restitution.

The OTS said the current damage amount stems from two transactions. One involved $30 million that Lincoln lent to a Keating-led limited partnership that owned the Hotel Pontchartrain in downtown Detroit. The other involved Keating’s use of an employee stock ownership plan to borrow money for the purchase of Keating family stock.

Both transactions violated banking laws and caused losses at Lincoln, Fiechter said.

The agency said it doesn’t expect to recover much money soon from Keating, who has said he is broke. But it said the decision gives it a claim on any assets that might be found in the future.

Lincoln’s losses are expected to cost taxpayers $2.6 billion. Regulators said last spring that wrongdoing by Keating and his associates accounted for about $962 million of that loss.