A lawyer for Golden State Bancorp on Friday accused the government of relying on "economic gobbledygook" to avoid paying damages in the California thrift's $2 billion breach-of-contract lawsuit.
Ronald W. Stevens told U.S. Claims Court Judge Loren Smith that government officials "worked backward from the result they wished to obtain-zero damages-and concocted every argument they could think of to reach that result."
Judge Smith has heard more than 150 days of testimony since February 1997. Golden State, parent of Glendale Federal Bank, and the Justice Department delivered closing arguments in the case Friday. Judge Smith is expected to issue a decision this year.
Mr. Stevens attacked the government's contention that supervisory goodwill was not a valuable asset. He said goodwill gave Glendale leverage to make profitable investments.
Glendale took over a troubled thrift in 1981 under a deal with federal regulators that let it offset bad loans with an equal amount of supervisory goodwill. Congress voided this and hundreds of similar deals, and 120 institutions sued, claiming nearly $30 billion in damages.
In 1996, the Supreme Court ruled that the government had broken its word, and it ordered the federal claims court to decide how much, if anything, the government must pay.
Several cases have been settled this year, though none with damage claims nearly as large as Glendale's. The government's lawyers argued that Glendale deserves no more than $28 million for its claim.