Thrift Fund to Be Tapped for Suits

The Treasury Department plans to tap a thrift rescue fund to settle lawsuits the government faces from its handling of the savings and loan crisis, the Federal Deposit Insurance Corp. said Thursday.

At issue are breach-of-contract lawsuits--seeking a total of $30 billion--in which about 100 thrifts argue that the government reneged on a key agreement about the accounting treatment of takeovers of ailing thrifts, takeovers that were encouraged by regulators.

The S&Ls; argue that the government broke an agreement to let thrifts count as capital part of the premium, called “supervisory goodwill,” from takeovers of ailing S&Ls.; The accounting change led to tremendous losses for many S&Ls.;

The FSLIC Resolution Fund has $2.17 billion in cash and assets.