FDIC Is Losing a Crusader As Feinstein Goes Private

WASHINGTON -- The Federal Deposit Insurance Corp. had itself a crusader in lawyer Howard Feinstein, who is about to leave the agency to take a job in the Washington office of Thacher Proffitt & Wood.

In the mid-1970s, while with the Justice Department, Mr. Feinstein prosecuted Ku Klux Klan members in the South. In the face of death threats, he spent long nights sleeping on floors with his room blacked out.

Last year, with the FDIC, he spearheaded the investigation into Michael Milken and the Drexel Burnham Lambert Group's involvement in selling junk bonds to savings and loans.

A Belief in Deterrence

"I feel very uncomfortable with the thought of people in a federally regulated industry breaking the law and not paying a price for it," he said. "I believe in deterrence."

But after two years at the FDIC, where he was assistant general counsel and chief of the conflicts and criminal restitution section, the 44-year-old Mr. Feinstein said he was presented an "opportunity he couldn't refuse" to join Thacher Proffitt & Wood.

Mr. Feinstein ends his FDIC stint on a high note. His unit recently snared $12.5 million in restitution from Janet McKinzie, the former companion of the head of failed North American Savings and Loan Association in Costa Mesa, Calif. Ms. McKinzie was was slapped last year with a 20-year prison sentence for racketeering and bank fraud. "We just got the check," said Mr. Feinstein.

Mr. Feinstein's unit has six lawyers who work to recover assets stashed away by bank and S&L crooks, and to gather evidence to justify FDIC recommendations for stiff jail sentences.

Since its inception nearly two years ago, the unit has facilitated the recovery by other agencies of about $20 million and has won several cases, requiring defendants to pay the agencies millions in restitution, Mr. Feinstein said.

The unit also won one of its biggest cases last year when a California judge sent back to jail two paroled executives of the failed Golden Pacific Savings and Loan Association, Santa Rosa, for violating a court-ordered freeze on their assets. Instead of paying restitution, the duo went on a spending spree buying computers, horses, real estate, and luxury vehicles.

Penalty for the Spree

Mr. Feinstein's unit headed the case against Golden Pacific executives Jay Solderling and his brother, Leif, who were sentenced to six and one-half years in prison and five years' probation after finishing a seven-month jail term in 1988.

Mr. Feinstein joined the FDIC in 1989 after two years with the Federal Home Loan Bank Board, where he was assistant general counsel in charge of its criminal program. Before that, he spent nearly 10 years as a Department of Justice litigator.

Some wonder whether Mr. Feinstein will meld into the corporate world. He dresses casually and for fun plays basketball as well as several instruments in a band. Says one FDIC insider, "I have a hard time seeing Howard in a three-piece suit."

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