Owners of Seized Fla. Thrift Sue Agencies Over Shutdown

The owners of Florida's Oceanmark Bank are suing federal regulators for shutting down the thrift this month.

Jeffrey M. Fenster, who along with his sister owned a controlling interest in the North Miami Beach thrift, filed suit Monday against the Office of Thrift Supervision and the Federal Deposit Insurance Corp.

The OTS closed $71 million-asset Oceanmark July 9, claiming it was severely undercapitalized. The same day, the FDIC transferred Oceanmark's deposits and $6.3 million of assets to Third Federal Savings and Loan Association of Florida in North Miami Beach.

In the complaint, filed in U.S. District Court in Fort Lauderdale, Fla., Mr. Fenster and other directors called the OTS action "capricious, and without substantial factual foundation."

The disagreement centers on whether Oceanmark should be allowed to count $7.9 million of home mortgages on its balance sheet. The thrift had tried to sell these loans to Southern Pacific Funding Corp. in Portland, Ore., but the buyer went bankrupt before the sale could be completed.

Oceanmark went to court to take back the mortgages, which are in custody of a bankruptcy court. Without the loans, or a payment stream from them, the thrift's liabilities exceeded its assets by $1.8 million, giving it a negative capital position.

The plaintiffs are asking the court to rule that the mortgages should have been included on the thrift's balance sheet and to require the agencies to let Oceanmark reopen.

Spokesmen for the OTS and FDIC said they do not discuss pending litigation.

Mr. Fenster has had a previous run-in with the OTS. Last September, the thrift sued the agency and Housing and Urban Development Secretary Andrew Cuomo, a former Oceanmark investor.

Mr. Fenster and Mr. Cuomo have been feuding since the 1980s when Mr. Cuomo led a failed campaign to take control of Oceanmark.

The thrift alleged in that suit, which is pending, that Mr. Cuomo had used his influence to press the OTS to clamp down unfairly on Oceanmark. Mr. Fenster was not available, and a spokesman for Mr. Cuomo declined to comment.

Kenneth Thomas, a Miami-based teacher and author, called the OTS' decision to close the thrift "subjective."

"Things are not great there, obviously," he said, "but there are banks in the state in worse shape that are still open."

But Bert Ely, a Washington-based consultant, said Oceanmark's performance-it has not made money since the first quarter of 1998-gave the regulator all the ammunition it needed.

"Looking at the numbers," he said, "this outfit clearly had problems. It tooks to me like the OTS was well within its rights to take it over."

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