Newspaper article THE JOURNAL RECORD

Regulators to Study Offers for Troubled Texas Thrifts

Newspaper article THE JOURNAL RECORD

Regulators to Study Offers for Troubled Texas Thrifts

Article excerpt

organizing the largest federal liquidation of a thrift institution - the $1.3 billion shutdown of the Vernon Savings and Loan Association of Dallas - thrift regulators do not intend to close any other large Texas institution in the near future, said M. Danny Wall, the chairman of the Federal Home Loan Bank Board.

Rather, the bank board plans to concentrate on closing troubled savings institutions in other parts of the country while it studies more than a dozen proposals by investors to take over some of the 48 Texas institutions that the board characterizes as insolvent.

The bank board closed Vernon and its 10 offices last Thursday and created a new institution called the Montfort Savings Association, which opened Monday morning. The regulators also injected $200 million in cash, plus a note from the FSLIC for $1.1 billion.

The Frederick, Okla., office of Vernon Savings will remain open as a branch of Montfort, according to Ron Edmondson, spokesman with the Federal Home Loan Bank Board.

``We wanted the impact of acting to close a major institution,'' Wall said. ``We wanted to make a statement - that the recap of FSLIC is up and running and that we are using the money for a chain of closings.''

Wall was referring to a law signed last summer by President Reagan that allows the Federal Savings and Loan Insurance Corp. to borrow up to $10.8 billion over three years to close or merge several hundred insolvent savings and loans throughout the country.

If the shutdown of Vernon Friday was a signal, it was that the previously bankrupt fund that insures $800 billion in deposits is prepared to spend a great deal of money to fix a severely weakened industry.

Currently flush with $1.2 billion in recently borrowed funds, Wall said the agency planned to shut down 12 other insolvent savings institutions before the end of the year, bringing to 28 the number of closings this year. …

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