The U.S. Court of Federal Claims handed a victory to investors in 24 current and defunct thrifts who are seeking to hold the government liable for eliminating regulatory goodwill.
Judge John P. Wiese ruled that the statute of limitations on goodwill suits expired Dec. 7, 1995, six years after the Office of Thrift Supervision's rules implementing the thrift bailout law took effect.
Government lawyers had argued that the clock started four months before the rules were implemented, when Congress enacted the Financial Institutions Reform, Recovery and Enforcement Act. They asked the judge to throw out suits by 26 thrifts that filed them after Aug. 9, 1995.
"It's very gratifying to prevail," said Steven S. Rosenthal, partner with Morrison & Foerster. Mr. Rosenthal represents Bank of America Federal Savings Bank, one of the 24 institutions that benefited from the decision.
The Jan. 7 decision prevents investors in Southern California Federal Savings Bank and Mercury Savings and Loan from pursuing goodwill claims.
Thrifts earned goodwill when they took over ailing peers at the government's request in the 1980s. Congress eliminated the benefit in 1989, causing scores of thrifts to fail.