Former Rep. Frank Annunzio didn't always get much respect, even when he served as chairman of the House Banking Committee's all-important financial institutions panel.
He was the master of mispronunciation, prompting one mystified colleague to address him as "chairman enunciation." A maverick who sometimes seemed to cross the line into eccentricity, he often appeared at the mercy of staffers who choreographed his subcommittee hearings.
But Rep. Annunzio knew something that many of his more agile colleagues did not: the promise the government had made to the thrift industry on supervisory goodwill was meant to be kept.
In 1989, as the House Banking Committee worked on the savings and loan bailout law, Rep. Annunzio was one of a handful of lawmakers who warned that Congress would rue the day it decided to strip thrifts of supervisory goodwill.
There would be lawsuits, he said, and the government would end up paying through the nose.
In the highly charged atmosphere of the thrift bailout legislation, Rep. Annunzio and his allies weren't exactly honored for their prophecy. There was an unspoken assumption in much of the press coverage of the bailout bill that those who didn't advocate the most stringent capital standards possible were industry pawns - the spokesmen for a corrupt and dying business.
But Rep. Annunzio's judgment appears to have been vindicated. A federal appeals court recently held that the government entered into enforceable contracts when it allowed thrifts to book supervisory goodwill. As a result, the government is now liable for damages.
The financial services industry is likely to find the court decision a mixed blessing. On the one hand, it was always a bit unsettling to know that a government agency, headed by people appointed by the President and confirmed by the Senate, could enter into contracts that Congress would later repudiate.
Still, nobody really wants to defend supervisory goodwill, an intangible asset that is to a balance sheet what a hole is to a doughnut. It's there, all right, but it's still just air.
Supervisory goodwill was put into use in the early 1980s when a cash- strapped Federal Savings and Loan Insurance Corp. was desperate to unload failed thrifts on the cheap. Instead of cash, the agency offered acquiring institutions a deal: They could count the hole as part of the doughnut.
That meant that an institution's negative net worth - what most people think of as a liability - was converted into an asset. It was an act of desperation that nobody was willing to defend on intellectual grounds.
But for better or worse, it was the deal the government struck. The thrift industry emphasized that point heavily in the legislative debate over goodwill, arguing that "a deal is a deal."
That slogan struck industry critics - which by that time included most of the civilized world - as just a bit shallow. Nobody ever really said why the government could cut a deal one day and repudiate it the next, but many learned people seemed quite sure that it was the way to go with the S&L mess.
It wasn't the only example of the government's willingness to renege on its deals with the thrift industry. It's sometimes forgotten, but Congress agreed in 1989 that the federal government would make payments to help build a new thrift insurance fund if necessary.
The Clinton administration dutifully sought an appropriation in 1993 to make good on that promise, but Congress wasn't buying. This year, the big question is how much the banking industry - not the government - will contribute to the thrift fund.
The court decision won't help banks or thrifts on that issue. But some observers, including Douglas Faucette - a lawyer who represents goodwill thrifts - think it may be a start.
The court, he said, "vigorously asserted the proposition that the government cannot repudiate its solemn contract."
Which is what Frank Annunzio was saying all along.