Federal Courts Can Hear S&l Suits before Bank Board
In a significant victory for the thousands of creditors owed billions by failed S&Ls nationwide, the court said federal courts may hear such lawsuits before any action is taken by the Federal Home Loan Bank Board, the agency that regulates the industry.
The 9-0 ruling rejuvenated a $113 million federal court claim made by a Texas land deals group against a savings and loan association based in Arkansas.
In an opinion by Justice Sandra Day O'Connor, the court said federal courts - and not the Federal Savings Loan Insurance Corp. - have the initial authority to review disputes between failed S&Ls and their creditors.
``We hold that Congress did not grant FSLIC such (exclusive) power and that the creditors of a failed savings and loan association are entitled to ... consideration of their claims in court,'' O'Connor said.
The Coit Independence Joint Venture, the Texas land purchasers, accused the FirstSouth savings and loan association in Pine Bluff, Ark., of usury and other unfair business dealings.
FirstSouth loaned money to Coit in the mid-1980s, including a $30 million loan in 1983 to purchase and develop a tract known as the Frankford property in North Dallas.
Coit alleged that FirstSouth illegally charged fees and required promissory notes that made the 1983 loan usurious. …