CAL FED AWARD ROCKS SHARES; ANALYSTS SAY $23.3 MILLION JUDGMENT FAILS EXPECTATION.Byline: Rob Wells Bloomberg News Shares of California Federal Bank California Federal Bank, often abbreviated to "Cal Fed", was a savings and loan bank in California. It existed from 1926 until 2002, when its parent company Golden State Bancorp was acquired by Citigroup, resulting in the bank being merged into Citibank. plummeted Monday following a judge's decision to award the bank a less-than-expected $23.3 million in a lawsuit lawsuit: see procedure; tort. against the government. Judge Robert H. Hodges Jr. of the U.S. Court of Federal Claims awarded the amount late Friday after the market closed. The bank, a unit of Golden State Bancorp, sought more than $1.5 billion in its paper asset ``supervisory goodwill'' claim. The bank accused the government of breaking a promise of favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. accounting treatment for the assets related to the thrift thrift: see leadwort. takeovers in the 1980s. Hodges' decision was especially surprising after an April 9 ruling by U.S. Court of Federal Claims Judge Loren Smith The name Loren Smith might refer to:
``I heard Hodges in court and he was openly skeptical, but I never dreamed he would give them nothing,'' said Charlotte Chamberlain Chamberlain may refer to:
Many analysts had expected the April 9 Glendale Federal decision to set a precedent for thrifts and their owners in some 120 similar lawsuits seeking some $30 billion. The latest ruling has clouded that picture, likely leaving it to an appeals court to sort out. Cal Fed said it will appeal Hodges' decision. California Federal Bank goodwill certificates fell $6.50 to $2.50 after closing at $9 on Friday. As a result of the ruling, Cal Fed shares will ``take it on the chin,'' said Dave Dusenbury of Credit Suisse First Boston Credit Suisse First Boston was originally the trading name of the Financière Crédit Suisse-First Boston, a London-based 50-50 investment banking joint venture formed in 1978 between the First Boston Corporation and Credit Suisse. Corp. The difficulty is determining what pieces of the case may hold up on appeal and how to value these shares, he said. ``I'm not smart enough to figure out what pieces will hold up.'' Dusenbury said the two judges had strikingly different approaches to their decisions in the Glendale and Cal Fed cases. ``Judge Hodges had a view that the glass is half empty,'' Dusenbury said. Cal Fed ``did not establish substantial losses that we could translate into damages properly awarded against the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ,'' because ``Cal Fed was a relatively healthy thrift before it entered in this contract, and it is healthy today,'' Hodges ruled. He said Cal Fed ``did not prove that it was damaged beyond the costs of raising capital to replace its goodwill.'' Hodges also said some of the thrifts Cal Fed acquired in Georgia and Florida were successful because it was able to sell high-interest mortgages before interest rates dropped and invest the proceeds in fixed-rate debt. Cal Fed ``turned the failing thrifts around and made money from them,'' Hodges said. The judge also rejected Cal Fed's argument that the accounting rule changes by federal regulators put the bank in financial peril The designated contingency, risk, or hazard against which an insured seeks to protect himself or herself when purchasing a policy of insurance. Among the various types of perils for which insurance coverage is available are fire, theft, illness, and death. PERIL. . Cal Fed ``did not establish a relationship between these costs and any actions by the federal government,'' the judge wrote. |
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