Preliminary Inquiry Into Allegations Regarding Senators Cranston, DeConcini, Glenn, McCain and Riegle, and Lincoln Savings and Loan

The federal regulators' campaign of harassment reached new depths in the wake of the filing of the RICO complaint. agreement had been reached between counsel to avoid the need and expense of personal service of the summons and complaint, the RTC directed that the summons and complaint be served upon the individual defendants on a Thursday evening, apparently calculated to assure that such service could be accomplished openly before the eyes of spouses, children, and neighbors of the defendants who, based on assurances by the federal regulators' lawyers, were to be spared the embarrassment of such intrusive service of process.

Thus, since at least midsummer 1989, the RICO action has served the purposes of the federal regulators less as a lawsuit than as a vehicle and excuse for publicly pillorying defendants, humiliating them and their families, and permitting the media to ac as billboards for the federal regulators' campaign of harassment and innuendo.

Not satisfied with the embarrassment imposed on ACC officers' spouses, children and neighbors in connection with the service of the RICO complaint, in contravention of agreements reached with their counsel concerning such service, the regulators repeated this tactic on November 20, 1989, again unnecessarily. As noted above, a series of hearings is scheduled to begin on or about December 7, 1989 in the United States District Court for the District of Columbia in connection with ACC and Lincoln's claims that the FHLBB-imposed conservatorship and receivership were without lawful grounds. At the November 8 and 9 hearings at which these hearings were scheduled, ACC's counsel assured the Court of ACC's cooperation in making witnesses available. Counsel repeated those assurances to the RTC's counsel on November 13, 1989. Inexplicably, RTC counsel stated their intention to serve subpoenas on these individuals nonetheless. What they didn't say was that they intended to do so in a manner and at a time designed to cause the maximum personal embarrassment and discomfort. Subpoenas were in fact served at the individuals' homes between 7:00 a.m. and 9:00 a.m. on Sunday morning, November 20, 1989 and attempts were even made to serve Keating in the midst of his appearance before the House Banking Committee and the public on national television, notwithstanding that Keating's counsel had already agreed to accept service, and in fact, had accepted service on his behalf.

CONCLUSION

As set forth above, almost since the time ACC acquired Lincoln in 1984, ACC and Lincoln have been the victims of unprecedented regulatory excesses which have severely damaged ACC and Lincoln and led ACC to file the Chapter 11 case in which it

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now operates. The continued abuses of regulatory process, which, ACC fears, are designed more to justify the enactment and funding of broad legislation restructuring the savings and loan industry than to pursue legitimate regulatory goals, will continue to obstruct ACC's efforts to confirm a plan of reorganization if not checked. ACC continues to be committed to reorganization and, thereby, satisfying the claims of its creditors. To do so, however, it must have the similar commitment of the parties in interest in a climate in which facts, and not innuendo, are the basis for decisions.

TABLE OF EXHIBITS

Letter from David M. Serxner, Supervisory Agent of the FHLBB, Eleventh District, to the Board of Directors of Lincoln, dated November 8, 1982, concerning Lincoln's declining operating performance prior to ACC's acquisition.

Application of ACC on Form H-(e)l to acquire Lincoln (the "Application"), excluding exhibits.

Exhibit Number

Application of ACC on Form H-(g) for the issuance of debt ("the Debt Application"), excluding exhibits.

Correspondence between counsel for ACC and the
California Department, concerning
ACC's application to acquire Lincoln.

Revised Lincoln Operating Plan filed with the with the FHLBB, dated November 16, 1984.

Letter from Alan Greenspan to the FHLBB, dated November 1, 1984, concerning the proposed direct investment rule.

R000308

Declaration of Joseph Kotrys, examiner in charge of the 1986 FHLBB examination of Lincoln, filed in the United States District Court for the District of Arizona, In re American Continental Corporation, et al., CIV 89-1231 PHZ RMB, dated September 20, 1986.

Minutes of the ERC meetings of February 22, 1988 and March 14, 1988.

Memorandum of Conference Call Meeting, dated February 16, 1988, 4:05 p.m. (PST), among members of the FHLBB and the FHLB-SF.

Agreement and Memorandum of Understanding among
Lincoln, the FSLIC, and the FHLBB, dated
May 20, 1988.

10A

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10C

Letter from Rosemary Stewart, Director
of the Office of Enforcement, the FHLBB,
to the Board of Directors of Lincoln,
dated May 20, 1988, clarifying the MOU.

Men randum from the ERC to the FHLBB, dated April 30, 1988, summarizing the findings and recommendations of the ERC with respect to Lincoln.

Tax Preparation and Allocation Agreement between
Lincoln and ACC, dated March 14, 1986, and
Letter from Sidney C. Mar, Supervisory Agent
of the FHLBB, Eleventh District, to the Board
of Directors of Lincoln, dated April 2, 1986,
confirming regulatory approval of that agreement.

Let ers from Darrel W. Dochow, Acting Principal
Supervisory Agent of the ORA, to the Board
of Directors of Lincoln, dated February 13,
1989, announcing the commencement of the
1989 FHLBB examination of Lincoln, and to the
Board of Directors of ACC, dated February 13,
1989, announcing the commencement of the 1989
holding company examination of ACC.

Let ar from the California Department to Lincoln,
dated January 27, 1987, approving the lease
of space in Lincoln branches to ACC for the
sale of ACC subordinated debentures
and Master Sublease between Lincoln and ACC,
dated December 1986.