Accounting Firm to Pay $186.5 Million to Settle Claims : Banking: Agreement by KPMG Peat Marwick is latest in government’s effort to recoup losses from the S&L; debacle.

KPMG Peat Marwick, which once audited the books of nearly half the nation’s banks and thrifts, said Tuesday that it will pay the federal government $186.5 million to settle allegations that its work played a role in the failure of several savings institutions dating back to the 1980s.

The settlement is the latest in a series of deals the government has reached with America’s biggest accounting firms for their part in the savings and loan debacle and the failure of dozens of banks.

The accord covers 22 financial institutions that KPMG or its predecessor, Main Hurdman, audited since the mid-1980s. Two of those institutions were in California: Costa Mesa-based Pacific Savings Bank, seized by regulators in 1989, and Orange-based Ramona Savings & Loan, taken over in 1986.

Charges against KPMG included improper accounting for profits on sales of real estate and exchanges of assets, which made some institutions look stronger than they really were.

The pact raises the amount that regulators have recovered from major accounting firms to $1.4 billion, according to a report by the National Assn. of Securities and Commercial Law Attorneys. Deloitte & Touche paid $312 million to settle similar charges in March, Arthur Andersen paid $79 million last year and Ernst & Young paid $400 million in 1992.

New York-based KPMG, however, was the country’s biggest auditor of thrifts when the S&L; crisis first surfaced in the 1980s. At its peak, the accounting firm said it worked for about 45% of all U.S. banks and thrifts. It still calls itself the market leader, but it does not disclose its current share.

KPMG spokeswoman Gina Greer said the number of claims the government had filed against the firm and the amount it will pay were “relatively small,” considering its once-dominant market share and potential financial exposure.

“By comparison to those other firms, we’re happy with the way things have worked out,” Greer said.

The blanket agreement settles all of the claims and charges made against KPMG by the Resolution Trust Corp., the Federal Deposit Insurance Corp. and the Office of Thrift Supervision, OTS spokeswoman Laurie Lavaroni said.

The RTC, which is in charge of cleaning up the S&L; debacle, and the FDIC had charged KPMG with accounting malpractice. The OTS had filed a variety of charges, most of which concerned the firm’s alleged failure to use generally accepted accounting practices when auditing the various institutions’ books.

In the settlement, KPMG neither admitted nor denied wrongdoing but agreed to change its accounting policies when auditing federally insured institutions in the future, the OTS said.

“Settlement at this time represents, overall, an intelligent business decision,” KPMG Chief Executive Jon C. Madonna said.