Through their innovative financings and investments, ACC'S
management had expertly guided ACC for seven years from a

entrepreneurs into the debilitated thrift industry. ACC applied to

interest rate mismatches and lack of liquidity. ACC proposed to

nontraditional transactions to provide matched maturities.

<

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With the 1986 examination moving into its thirteenth month, ACC and Lincoln management became frustrated with the apparent disorganisation and indecision of the examiners and with the FELBB's unlawful public disclosures of confidential examination information. Substantially all of ACC's and Lincoln's transactional documents and corporate records, representing millions of pages, had been repeatedly made available to and copied by the FHLEB, exit interviews had been scheduled and cancelled, and the examination appeared to have no prospect for conclusion.

ACC and Lincoln turned to their elected representatives for help. In particular, ACC and Lincoln sought assistance to ascertain the motives and justification for the prolonged examination and if, as ACC and Lincoln perceived, the examination was the product of undue regulatory seal, to bring perspective to the process by suggesting that the FHLEB either & charge violations or complete and conglude the examination. ACC and Lincoln management had visited members of Congress for several months to urge rejection of the "re-regulation" of the savings and loan industry represented by the Direct Investment Regulation. Senator Donald W. Riegle (D-Mich.) listened to ACC's story, conducted his own inquiry and agreed to contact FELBB Chairman Edwin J. Gray to arrange for the Chairman to meet with a bipartisan group of senators who represented ACC's state of organization, Ohio (Sen. John Glenn, D-Ohio), ACC's principal

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place of business, Arizona (Sen. Dennis DeConcini, D-Arizona and
Sen. John McCain, R-Arizona), and Lincoln's place of charter and
principal place of business, California (Sen. Alan Cranston,
D-Calif.).

ACC and Lincoln sought (and certainly received) no special favors in connection with or as a result of these meetings. Indeed, as described below, the primary effect if these meetings. appears to have been to intensify the wrath of the FILB-SY_and_to proliferate unfounded public attacks on the integrity of these Senatora

On April 20, 1987, Lincoln received the confidential results of the 1986 PHLBB 13-month examination. Lincoln's response, dated June 26, 1987, pointed out numerous factual and accounting errors. FALB-87.never replied.

Shortly thereafter, an article appeared in the July 1987 issue of Regardie'a, a national publication, which disclosed the contents of the preliminary 1986 Examination Report, including confidential information concerning Lincoln and certain of its customers. The article stated that "the Bank Board has secretly concluded" that "Lincoln is unsafe" and "a threat to its insurer." This article expressly acknowledged its sources to be the preliminary FHLBB 1986 Examination Report and other confidential

I. Introduction and.
I*

kecutive SUBAXY

Prior to the 1984 acquisition of Lincoln Savings and Loan Association ("Lincoln"), American Continental Corporation ("ACC") was providing housing and jobs for thousands of Americans. Through their innovative financings and investments, ACC's management had expertly guided ACC for seven years from a debt-laden real estate construction company to a position of preeminence and success among America's home builders. When, in 1983, Congress and the California Legislature invited America's entrepreneurs into the debilitated thrift industry, ACC applied to acquire an ailing Lincoln with visions of many years of future.

success.

The cornerstone of ACC's application to acquire Lincoln
was the ability edits mans
to remedy the thrift's chronic

interest rate mismatches and lack of liquidity.

ACC proposed to

utilize the expertise of its management and engage in

nontraditional transactions to provide matched maturities,
liquidity, and profitability.

After four months of critiquing

-1

The nere

of the

Kengin

uam

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millions of pages, had been repeatedly made available to and)
copied by the FHLBE, exit interviews had been scheduled and
cancelled, and the examination appeared to have no prospect for
conclusion ACC had tried, on several occasions, to meet with
James Cizona, Lincoln's Exincipal Supervisory Agent at the
YHLB-87, to address the unexplained and extraordinary length of
the examination only to have scheduled zastings cancelled by Mr.

ACC and Vincoln turned to their elected representatives

for help. In particular, ACC and Lincoln sought assistance to
ascertain the motives and justification for the prolonged
examination and if, as ACC and Lincoln perceived, the examination
was the product of undue regulatory seal, to bring perspective to
the process by suggesting that the FHLAB either charge violations
or complete and conclude the examination. ACC and Lincoln
management had visited members of Congress for several months to
urge rejection of the "re-regulation" of the savings and loan
industry represented by the Direct Investment-Regulation.

Sanator
Donald W. Riegle (D-Mich.) listened to ACC's story, conducted his
own inquiry and agreed to contact FELEB Chairman Edwin J. Gray to
rin Aquil 1987

arrange for the Chairman to meet with a bipartisan group of
senators who represented ACC's state of organisation, Ohio
(Sen. John Glenn, D-Ohio), ACC's principal place of business,
Arizona (Sen. Dennis DeConcini, D-Arizona and Sen. John McCain,