Carteret's Use Of Goodwill Is Upheld
WASHINGTON - Carteret Savings Bank should be allowed to count $170 million of supervisory goodwill as capital, a federal judge ruled Tuesday.
The ruling by Judge John W. Bissell of U.S. District Court for the District of New Jersey will bring Carteret into compliance with capital standards, according to AmBase Corp., Carteret's New York-based parent.
The same judge granted a preliminary injunction to AmBase in April, ordering thrift regulators to honor earlier commitments to treat the balance-sheet goodwill as capital. About 25 cases challenging the regulators are moving through the courts, and they have yielded conflicting results on whether the goodwill qualifies as capital.
Aftermath of '89 Law Change
Carteret had $5.7 billion in assets at the end of 1990 and is the largest thrift in New Jersey. It was hurt in 1989 when banking laws were changed allowing less goodwill to count as capital.
The goodwill, which represents intangible asset values, resulted from purchases of four failing thrifts in the mid-1980s from the federal government.
Without the latest ruling, Carteret would not be insolvent but would be in noncompliance with regulatory capital requirements, a spokesman said.
The district court ruling is certain to be appealed by the Office of Thrift Supervision, which has succeeded in over-turning two of three previous lower court rulings against it. The agency asserts that its sole defeat was on a technical point of jurisdiction.
This report includes material from Reuters