DETACH AND RETAIN THIS STATEMENT. THE ATTACHED CHECK IS IN PAYMENT OF THE ITEMS DESCRIBED ABOVE. IF NOT CORRECT, PLEASE NOTIFY PROMPTLY. NO RECEIPT DESIRED. XB631 0378 I've received your September 11 letter recounting our phone 1. You mentioned that you were virtually finished putting 2. We discussed the scheduling of a meeting among you, as, and Sincerely, Mike Michael Patriarca what we stated in our conversations. FHLBB-LIN-8932 Director, Agency Group MP/ca bcc: W. K. Black, C. A. Deardorff, G. Robinson, R. A. Sanches Record Copy: M. Patriarca, Agency Group 600 California Street Post Office Box 7048 San Francisco, Caliomis 94120-7948 phone 416-993-1000 OTS-D11-0473235 SPECIAL COUNSEL EX. 566 "IS" FROM: CHIBACKS To: DOCHOWD --AIVASEDC TOL CHESUSLR--FHLBSF 09/30/87 09:47:36m FROM: MICHAEL PATRIARCA, DIRECTOR Subject: Lincola As we proceed to try sach conclusions on the basis of what we know and identify what we're O to reach conclusions on, it has become plain that there is an incredibl Bunt of information in the files and in people's heads that should be taken into consideration. I think you should give serious consideration to coming out here (or sending Kevin) to review the files that practicality prevents shipping to Washington. Moreover, I think it's critical to talk to the outside folks who have been helping us for an extended time on this exam. These include the attorneys from Pillsbury, the accountants from Leventhol and, perhaps, certain of the appraisers who have looked at the more complex properties involved. Quite frankly, I don't think anyone could perform an independent review and hope to reach an informed and well reasoned decision without undertaking those kind of inquiries. Separately, I'm told that Lincoln delivered to you yesterday another 70 page submission. Al is expressing a copy to us. But the timing of the submission raises serious questions about the conclusion schedule you outlined to me. Additionally, it seems a bit odd that we were instructed not to send examinera into the institution to get needed information so that the exam could be closed out and, at the same time, the institutioncontinues to prolong the reveiw period by making 11th hour submissions. From my perception, I' distressed that the extensive time we've afforded the institution to develop replies to our findings is seen as their due and the time it has taken us to review and analyze those responses is characterized as harrassment by dragging FILE: FILE181 OUTPUT C1 F.R.L.B. OF 8.7 VH/SP4 CHS out the exam process. There is a long history of actions on the part of the institution that has directly affected the amount of time the exam has taken. It's simply unfair to have those actions and our attempts to give them every opportunity to tell their side of the story characterised as deliberate delaying on our part. It is not only unfair, it's untrue. While I welcome any amount of scrutiny of our actions during this exam (or on this case generally), that's not the point of this note. The point is: to do the independent review you've undertaken, you have to undertake the inquiries I outlined in the first paragraph. We will make arrangements for you to meet with the outside experts 14 roll only give us a date. Our staff can be available any time Charles A. Deardor OTS-D11-0547172 FHLBB-LIN-106728 SPECIAL COUNSEL We have yet another delay in coming to a decision about Lincoln, though I sense a consensus starting to build in favor of a stronger action than simply a Memorandum of Understanding. The meeting began with Jordan Luke explaining why Lincoln did got appear today to give their side of the story. Lincoln strenuously objected to anyone from S. F. being there. In particular, Margery Waxman reported that the officers in Phoenix stated that there had been a "run-in" with Richard Sanchez and Charles Keating, and they were not going to appear if Richard was here. George Barclay then took a very hard line, saying that "somewhere down the line we are going to have to stand up to these people, and I think this may be as good a time as any to do it." He was clearly irritated at the association's attempt to dictate who the ERC could invite to its meeting. Karl Hoyle seconded that theme, saying that just offering them the chance to make a presentation indicated that we have been more than fair. After some discussion about possible options, Darrel, Jordan and George all approved the idea of Rosemary issuing a polite "take it or leave it" letter. As Secretary of the committee, Rosemary would formally invite the association to give a presentation at an ERC meeting on Friday, March 25 at 1:00pm. In the invitation, she would state who would be in attendance, and that would include a representative of the bank, and that list of attendees would not be open for discussion. However, the ERC would allow the association great leeway on what they would like to say. They can spend their time talking about what a wonderful association they are, or they can attack S. F., or they can do both. The subject matter would be entirely up to the association. Effectively. After that discussion, Seattle made its presentation. Seattle said that they wanted nothing to do with the association unless the Board told them to take them. I will give you the memo that Seattle presented. In further discussion, Seattle stated that did not believe they could trust the association, and did not see chance that their operations could be turned around. They also stated that if they were asked to take them, they would request the right to "write their own ticket" which would be either a Supervisor. Agreement or a Consent Order that committed the association to subot a business plan that puts them in regulatory compliance within a 3-5 year period of time, and any meterial violations from that plan woods SPECIAL COUNSEL |