Records showed that Metrobank Federal Savings spend about $600,000 to get a $28 million tax abatement from the city of Newark.
A failing New Jersey thrift paid more than $28,000 in campaign contributions in 1990 to the mayor of Newark and several city councilmen as it successfully sought a $28 million tax break from the city government, The Record of Hackensack reported this week.
But the 30-year tax abatement didn't save Metrobank Federal Savings and Loan Association from insolvency. The $386 million-asset thrift failed in 1991, costing taxpayers about $109 million.
The Record reported that state and federal investigators are examining the thrift's records, including the checkbook of its subsidiary, Forest Hill Asso-ciates, and internal memos between Metrobank officials which reveal an apparent pattern of influence-peddling through donations and mortgage loans.
Forest Hill Associates, had bought the 480-unit apartment complex for $16 million and planned to convert it into condominiums.
But the thrift was badly overextended by 1989 and needed the tax break.
An unidentified Metrobank official later said that each month without the abatement cost the thrift $300,000, the paper reported.
The bank's donations included a $10,000 check for Newark Mayor Sharpe James' 1990 birthday gala, the largest single contribution for that event.
Just three months after his birthday present, the mayor endorsed a 30-year tax break worth at least $28 million for the thrift's condominium-conversion project, The Record reported.
Nine days after the mayor's endorsement, the city council approved the tax abatement.
Mr. James declined to comment.
Additional checks had also been sent to the campaigns of at least seven city councilmen, the newspaper said.
The bank's internal memos show officials becoming desperate for the abatement, even considering a $500,000 gift to a tenants organization that opposed the conversion, the newspaper reported.
Records revealed that Metrobank spent about $600,000 to get the tax break, including $350,000 to the firm of Rodino & Rodino, the law firm of former Newark Rep. Peter W. Rodino, to lobby for the bank.
Officials at Resolution the Trust Corp. and the Office of Thrift Supervision declined to comment on whether an investigation was underway.
But The Record reported in June that RTC has subpoenaed the financial records of 22 former Metrobank officials.
