[NOTESACC) 7/9/89 NOTES ON LINCOLN SAVINGS AND AMERICAN CONTINENTAL 1. Corporations "qualifies by coordination" about 1,000 securities annually, according to Christine Bender. 2. It appears that Corporations "qualified by coordination" $570 million in ACC subordinated debentures from 1985 to 1988; however there is no indication that anything like that amount is or was outstanding at any one time. Some of the newer issues were intended to replace the older, higher interest rate ories. And at least $200 million was qualification for an additional year of an earlier, 60-day qualification whose time had run out. Also: The last ACC "10-Q" report filed with the SEC showed $213,585,000 in outstanding subordinated debt as of Sept. 30, 1988. The class action plaintiffs allege that "at least $250, 000, 000" has been lost by 23,000 investors. 3. Although its records are not available, Corporations believes its approval of Lincoln's sublease to ACC to permit ACC to sell its securites in Lincoln offices was effective July 1, 1987. Savings and Loan did not believe it had the authority to block the sales once it sensed they might be misleading, so attempted to police the situation until the lease expired one year later. Also: The lease approval was evidently made at a lower staff level in the department. Sale of uninsured "products" in savings and loan offices is not unusual. - A recent Savings and Loan phone survey found 24 state-charterd savings and loans selling uninsured investments -- stock, insurance annuities, mutual funds, bonds, and limited partnerships. None, however, appear to involve the debt of a parent corporation. 4. Lincoln/ACC and its attorneys made several appeals to the BT&H Agency, in general asking help to keep "the regulators from over-regulating and more specifically: 1) to deter Crawford from supporting an Ed Gray-sponsored amendment to federal regulations to limit S&L's direct investment (greatly expanded by deregulation); 2) to encourage Crawford to be more reasonable rather than refuse to permit lease extensions which would have let ACC continue to market its securities in Lincoln offices; 3) to attempt to deter Crawford from making statements which might block the last ditch attempts to sell Lincoln (all of which failed). 5. Tom left Corporations in February of 1987 and his first contact with the department on ACC/Lincoln matters appears to have been in March 1988, 13 months later. The November 3, 1986, subordinated debt qualification was to run for one year, but was evidently interpreted by ACC to have been extended by Corporation's erroneous acceptance of an amendment to it on Nov. 27, 1987. Tom's activites appear to focus on furthering a new application to continue the expired qualification and attempting to get a qualification for longer than 60 days. (On March 29, 1988, Corporations granted a 60-day qualification for $200 million; on May 26, 1988 as the 60 days ended Corporations granted a oneyear qualification for $170 million.) 6. - - Because of the fire and subsequent asbestos problems in the L.A. headquarters of both Corporations and Savings and Loans, historic information is not as available as it would otherwise be and questions are taking longer to answer. 1. Q: Why did you contact John Goeghegan? A1 "Because Danny Wall indicated that he thought Googhegan would be opposed to the Lincoln sale." 2. 01 What transpired during the conversation? A: "I asked John Goeghegan what his position would be on the Lincoln sale. He indicated he would not have a position because they would have no authority." 3. Q: Did you ask state regulators not to make critical statements about the Lincoln sale while the sale was pending? A: "No." 4. 0: Do you see any conflict of interest in contacting a regulator from another state on behalf of a major campaign contributor? A: "I see no conflict of interest in contacting a regulator from another state on behalf of a company that has a $50 million payroll in my state, over $1 billion in loans and investment and 1500 employees, in spite of the fact that some of the company's executives contributed to my campaign." -30 Passage of the Competitive Equality Banking The following summary and excerpts from the 1987 Congressional Quarterly Almanac document that there were three Senate votes on the FSLIC recapitalization bill passed in 1987 (formally titled the Competitive Equality Banking Act of 1987, or "CEBA"). The votes occurred on March 27, May 14 and August 4, 1987. In each instance, the Senate provided a smaller sum for FSLIC recapitalization than the $15 billion sought by FHLBB Chairman Gray. Senators Cranston and Riegle sat on the Conference Committee. March 27, 1987: The Senate approved a $7.5 billion, two- April 1, 1987: The House Banking Committee approved a $5 May 5, 1987: The House approved a $5 billion, two-year May 14, 1987: The Senate voted to substitute its earlier June 22-25, 1987: House and Senate conferees met, but July 1, 1987: House and Senate conferees agreed to an July 20-29, 1987: Faced with the threat of a presidential veto, the conference agreed to a $10.8 SPECIAL COUNSEL billion plan. CQ Weekly Reports 1729 (Aug. 1, 1987). August 4, 1987: The House adopted the conference report The Senate adopted the conference report August 10, 1987: President Reagan signed CEBA. CQ Week 38-020 - 91 - 36 |