Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 6, 1991 TAG: 9102060156
SECTION: BUSINESS PAGE: B5 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: LENGTH: Medium
An agreement with two federal agencies provides that Charter can continue its daily operations until the hearing without fear of any enforcement action by the Office of Thrift Supervision and the Federal Deposit Insurance Corp.
The agreement was reached in Abingdon before a scheduled hearing on Charter's request for an injunction against the two agencies. That request was filed Monday after the OTS disapproved Charter's plan for capital worth. Charter said it asked for an injunction to stop appointment of a receiver or conservator for the firm.
The government's disapproval of the plan might lead to a prohibition against new loans or investments for Charter, the firm said Monday. The agreement reached Tuesday held up such action until after the hearing.
"We didn't want the government to do something precipitous, so we moved first," said William Costan of the Washington law firm that filed the legal action for Charter.
If the government should appoint a receiver or a conservator for Charter as a result of the rejection of the capital plan, that could not be undone, Costan said. "We [Charter] said we can't afford to take a chance; you can't put toothpaste back in the tube."
OTS officials declined Tuesday to say why their agency had rejected the plan, which is required of savings and loans.
OTS spokesmen Jim Caton in Washington and Joel Palmer at the agency's regional office in Atlanta said that office doesn't comment on thrifts' capital plans involving projections and strategies. Palmer called this "confidential information."
Costan said his firm has filed three earlier suits for injunctions to head off government takeover of other troubled thrifts. The firm won temporary restraining orders in two cases and one is still unresolved, he said.
Costan described Charter as "a healthy bank with loyal customers."
However, Charter has been on the government's list of institutions that don't meet standards for capital strength, it has reported almost $75 million in substandard loans, and a former vice president is accused of embezzling $2.5 million.
A major issue in Charter's suit for an injunction is whether the government will honor an earlier contract with the institution, Costan said. In the early 1980s, Charter contends, the government agreed to allow the thrift to set aside part of its assets as "good will" when it took over three thrifts that were operating with negative net worths.
But last year, he said, the government changed its policy and told Charter it cannot treat part of its assets as good will.
As a result of the agreement reached Tuesday, Charter said it will operate its 30 branches, from Danville to East Tennessee, as in the past. The firm said it is confident of the merits of its claims.
by CNB