of the $1.2 billion the former LaSalle Talman Bank sought in a regulatory goodwill case. But he rejected some of the government's key arguments, which could benefit other thrifts seeking damages.

More than 120 thrifts sued the government after a 1989 change in federal law required them to quickly write off the negative net worth of failing institutions they had acquired during the savings and loan crisis.

In the case of LaSalle Talman, a Chicago institution now owned by ABN Amro North America Inc., Judge Eric G. Bruggink denied restitution Friday but awarded incidental costs. Though other thrifts faltered, the judge wrote, "Talman not only survived, it prospered."

ABN Amro bought LaSalle Talman in 1992 and infused $300 million of capital into it. In 1995 and 1997 it acquired other institutions, enabling the thrift "to achieve substantial profits in recent years," the opinion said.

But thrifts that lost money, Judge Bruggink signaled, could be awarded damages. "Supervisory goodwill had real value," he wrote. "Its removal had the potential to do real damage."

Supervisory goodwill was abolished by a provision of the Financial Institutions Reform, Recovery and Enforcement Act, a change characterized in a 1996 Supreme Court ruling as a breach of contract by the government. The claims court is deciding damages in the cases and selected LaSalle as a lead case.

In August the Justice Department appealed a $909 million judgment in favor of Glendale Federal Bank by Chief Judge Loren A. Smith. Glendale was merged last year with California Federal Bank, which was awarded $23 million by Judge Robert H. Hodges Jr. -- Katharine Fraser

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