OTS Assailed for $1 Million Fines Against 4 Directors of Oak Tree
WASHINGTON - The huge fines levied by the Office of Thrift Supervision against four directors of Oak Tree Savings Bank surprised industry lawyers, who say the moe is bound to hae a chilling effect on the industry.
The directors were fined $1 million each and their assets were frozen. These moves, coupled with penalties of $500,000 a day against Oak Tree's parent, Landmark Land Co. of Carmel, Calif., could frighten thrift managers into operating simple mortgage lending institutions, the observers said after the sanctions were announced Monday.
"Doing anything out of the ordinary is not worth it," said Wendy B. Samuel, general counsel with the National Council of Community Bankers. "Here is management that has done something, and the regulators jump on them with both feet."
The agency's finding, pertaining to the placement of subsidiaries in bankruptcy without agency approval, "is quite aggressie," said George Christopher, partner in the Washington office of the Kirkpatrick & Lockhart law firm. "It suggests you can violate the law by going to court. I know no precedent."
Regulators seized the $2.4 billion-asset Oak Tree on Sunday and placed it in receivership.
Five of six Oak Tree subsidiaries that filed for Chapter 11 reorganization own and operate golf resorts. Assets of the five total more than $1 billion.
The agency also charged that the filings came without warning last week and will cause the thrift to suffer losses.
The agency also issued a temporary cease-and-desist order on Sunday requiring the directors to immediately seek dismissal of the petitions to put the six subsidiaries under bankruptcy protection.
The agency charged that Gerald G. Barton, Landmark's chairman, and Bernard G. Ille, William W. Vaughan III, and Joseph W. Walser Jr. displayed "personal dishonesty" by their actions.