Magazine article Common Cause Magazine

Banker, Spare That Tree

Magazine article Common Cause Magazine

Banker, Spare That Tree

Article excerpt

Call it the 1990s version of robbing Peter to pay Paul, or maybe "the S&L crisis meets an old-growth forest."

The story, which proves once again that truth is stranger than fiction, features the head of a logging company that's felling California redwoods to pay off junkbond debts and who also was a major player in a failed S&L. Then a couple of would-be white knights dressed as congressmembers try to save the forest by having taxpayers buy what's left.

The plot thickens when alarmed environmentalists suggest that a federal buyout would put taxpayer money into the pocket of the very person partly responsible for a billion-dollar taxpayer bailout of a failed S&L. The forest must be saved, they say, but there's gotta be a better way.

Enter a proposed debt-for-nature swap.

At issue is the world's largest privately owned old-growth redwood forest, which covers 44,000 acres in California's Humboldt County and includes the Headwaters Forest. The owner is Pacific Lumber, a subsidiary of Maxxam Inc. The debt stems from the $1.6 billion taxpayer bailout of the United Savings Association of Texas (USAT), an S&L that failed in 1988.

The key link between Pacific Lumber and USAT is Charles Hurwitz, the controversial founder of Maxxam, says Josh Kaufman of Forests Forever, a California group that has worked for several years to save the Headwaters. In 1985 Hurwitz led Maxxam's hostile takeover of Pacific Lumber, a deal financed largely with junk bonds. Hurwitz also was chair and a director of United Financial Group (UFG) the holding company of the failed S&L.

The takeover saddled Pacific Lumber with huge debt and interest obligations, and to meet them the company sharply increased its logging of the region's famous redwoods. Environmentalists say Hurwitz and Pacific Lumber are destroying one of the world's most beautiful ecosystems, as well as the spotted owls, coho salmon and other threatened species that depend on it. The Audubon Society, Environmental Defense Fund, Greenpeace, Sierra Club and other environmental groups want Headwaters Forest preserved as federal land before its giant trees are turned into porch furniture.

The idea is gathering steam in Congress. …

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