Thrifts won another preliminary victory last week in their regulatory goodwill fight, yet a ruling on how much the government must pay for eliminating this favorable accounting treatment was delayed until next month.

Chief Judge Loren A. Smith ruled Friday that the government broke its promise to let Bank United Corp. count regulatory goodwill as capital for up to 40 years. The Houston-based bank earned the goodwill in 1988 when it acquired United Savings Association of Texas, a nearly broke thrift.

This is the third ruling in two months holding the government liable for breaking its word. The other two cases involved suits by shareholders of banking companies that failed after losing regulatory goodwill. Trials are being scheduled for all three cases to determine how much, if anything, the government must pay for breaking these contracts.

No judge has yet ruled on damages. Judge Smith, who also is handling the lead case, is expected on April 9 to issue the first damages award to Glendale Federal Bank. That decision was originally scheduled for this month and could still slip to late spring. Separate damages rulings are expected in May and June in California Federal Bank v. U.S. and LaSalle v. U.S.

"We are moving from a period where the focus was on liability, and we are going to start focusing on damages," said Steven S. Rosenthal, a partner at the Washington law firm of Cooper, Carvin & Rosenthal. "This is the next stage."

"In a few months we really will begin to get decisions in these cases," agreed Rosemary Stewart, a partner in the Washington office of the Spriggs & Hollingsworth law firm.

Nearly 100 regulatory goodwill suits collectively seek more than $20 billion in damages. A nearly broke Federal Savings and Loan Insurance Corp. used regulatory goodwill to entice healthy thrifts to acquire their ailing peers, but Congress eliminated the accounting treatment in 1989, calling it a bookkeeping gimmick. The loss caused scores of banking companies to become undercapitalized and most failed.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.