WASHINGTON -- The Big Six accounting firms have now contributed nearly $1 billion toward the cost of the thrift bailout, thanks to Tuesday's agreement between regulators and KPMG Peat Marwick.
The accounting giant agreed to pony up $186.5 million to settle claims by regulators who charged that shortcomings in its work for thrifts contributed to the savings and loan crisis.
Peat Marwick denied wrong-doing in connection with claims brought by the Resolution Trust Corp. and the Federal Deposit Insurance Corp.
It neither admitted nor denied Office of Thrift Supervision charges that it had failed to follow generally accepted accounting practices in its audits of thrifts that later failed.
Similar Settlements
The other Big Six firms that have agreed to such settlements are Ernst & Young, which paid $400 million; Deloitte & Touche, which paid $312 million; and Arthur Anderson, which paid $82 million.
Coopers & Lybrand settled a single suit in April 1993 for $4.5 million but has not agreed to a larger settlement of all failed-institution claims.
A spokesman said banking regulators have no pending litigation against the firm.
Regulators have not sued the remaining Big Six firm, Price Waterhouse, which did far more work for banks than for thrifts during the savings and loan crisis, a Price spokesman said.
Under Tuesday's settlement, Peat will pay $128 million in cash to the RTC and $58.5 million in cash and notes to the FDIC.
Peat also signed a cease-and-desist order with the OTS requiring accounting policy changes.
Client List
Among Peat's thrift clients were Beverly Hills, Calif.-based Gibraltar Savings; San Diego-based HomeFed Bank; Costa Mesa, Calif.-based Pacific Savings Bank; and Marina Del Ray, Calif.-based Western Federal Savings and Loan Association.
"In stark contrast to this small number of current claims," said Jon C. Madonna, chairman and CEO, "KPMG served more than 40% of the financial institutions in the U.S. during the 1980s, when the S&L crisis came to the forefront."
Last week, Peat Marwick settled for $3.5 million similar charges -- which it denied -- brought by credit union regulators.
