FirstFed Financial Corp., a Los Angeles thrift company battered by losses on option adjustable-rate mortgages, is taking the seemingly counterintuitive step of spending its capital to buy back debt — and may be setting an industry trend in the process.

On Friday, FirstFed moved to eliminate much of its debt, announcing it had offered to buy out bondholders for 33 cents on the dollar. Bondholders have until Thursday to take it up on its offer to purchase $150 million of bonds that have lost much of their value as the company's loan portfolio has weakened.

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