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COURT BACKS OTS SUBPOENA AGAINST ERNST & YOUNG

 COURT BACKS OTS SUBPOENA AGAINST ERNST & YOUNG
 WASHINGTON, March 3 /PRNewswire/ -- U.S. District Court Judge Royce


C. Lamberth ruled here today that the New York accounting firm of Ernst & Young must supply the Office of Thrift Supervision (OTS) with testimony and documents dealing with the firm's examinations of Lincoln Savings and Loan Association, Irvine, Calif., and 19 other failed thrifts.
 In his opinion, Judge Lamberth said, "The court sees no reason why OTS should not be able to investigate Ernst & Young and enforce the subpoena in this case. Accounting firms may have been responsible for many of the abuses which have led to this country's savings and loan crisis. In fact, OTS advised the court that approximately one-third of the 690 financial institutions that have failed were audited by Ernst & Young or its predecessor.
 "Moreover, government agencies such as OTS have made, and continue to make, great efforts to hold the parties responsible for these abuses accountable and save the American taxpayers from bearing the entire financial burden of bailing out the failed financial institutions. Investigations such as this one are vital to that process, and the court will not allow parties such as Ernst & Young to avoid ever being investigated," he said.
 Judge Lamberth also ruled that OTS and Ernst & Young should try to work out an agreement on conditions of the subpoena, and file a proposed stipulated order delineating those conditions within 10 days. Failing an agreement, each side must instead file within 10 days a proposed order with suggested conditions.
 The regulator seeks documents and testimony as part of an investigation and examination begun May 15, 1991, to determine whether Ernst & Young properly performed their role as auditors for the failed thrifts. OTS first sought the information by issuing an administrative subpoena June 11, 1991.
 In addition to Lincoln Savings and Loan, among the other failed institutions Ernst & Young audited were: Silverado Banking, Savings and Loan Association, Denver, Colo.; Vernon Savings and Loan Association, Vernon, Texas; and Western Federal Savings and Loan Association, Dallas, Texas.
 The OTS seeks engagement letters, workpapers, diaries and training manuals, financial statements and other items. The original deadline for the material was July 12, 1991. Ernst & Young filed a motion with OTS to quash the subpoena, but OTS denied the motion and a new compliance date of Sept. 16 was set.
 After Ernst & Young still ignored the subpoena, OTS petitioned the court to enforce the subpoena on Dec. 30.
 -0- 3/3/92
 /CONTACT: Thomas P. Mason of the Office of Thrift Supervision, 202-906-6677/ CO: Office of Thrift Supervision; Ernst & Young ST: District of Columbia IN: FIN SU:


PS -- NY096 -- 4732 03/03/92 19:04 EST
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Date:Mar 3, 1992
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