WASHINGTON -- A federal appeals court has erected another obstacle to efforts by the Resolution Trust Corp. to recoup millions of dollars from those responsible for the savings and loan disaster.
The latest blow came Dec. 16, when the U.S. Court of Appeals for the District of Columbia made it tougher for the RTC to determine the personal fortunes of those it is suing.
The case is one of several recent decisions limiting how the RTC can use administrative subpoenas, which are agency-issued orders requiring people to reveal financial and other information.
Earlier this year, the court ruled that regulators must suspect wrongdoing before they can use an administrative subpoena to gain access to a person's private financial records.
In this case, the court went a step further, ruling that the RTC cannot use an administrative subpoena solely to determine a person's net worth once it has sued that individual.
"This is the second time in a row that the court has thrown the yellow flag on the RTC and declared a foul," said Thomas Vartanian, a partner at Fried, Frank, Harris, Shriver & Jacobson.
The case stems from the 1990 failure of San Jacinto Savings and Loan Association. The RTC subpoenaed the financial records of Grant Thornton, the thrift's accounting firm, to determine whether the government could expect to recoup anything in a civil suit.
As the two parties fought over the subpoena, the RTC sued. The accounting firm seized upon that suit, claiming it made the administrative subpoena unenforceable.