Gov. Norm Bangerter Thursday called on parties involved in settlement of Utah's thrift crisis to "give a little."
The plea came in the wake of revelations that attorneys for depositors rejected the state's latest offer to settle a multimillion-dollar class action lawsuit against the state and former thrift industry officials.George Haley, co-counsel for Depositors of Insured Thrifts, confirmed that DOIT had received a formal offer Friday and rejected it Tuesday.
Haley confirmed press reports, quoting a state legislator, that the state's offer fell $10 million short of the minimum depositors could possibly accept to settle its claims.
"Everybody talks about the thrifts but the governor," Bangerter said, apparently angered by press reports of a Republican Senate caucus meeting Wednesday where Sen. Fred Finlinson, R-Murray, revealed the rejection and details of the offer.
Haley, also upset by Finlinson's disclosure, said parties involved in the settlement were "sworn to secrecy."
Bangerter, leaving for an economic development tour with companies in California, told reporters at the Salt Lake International Airport that thrift negotiations would continue Thursday night and Friday to break the impasse.
He said the only way to settle depositors claims is better cooperation from all parties involved, including depositors' attorneys.
"Everybody will have to give a little," he said.
Bangerter has so far been unable to get enough help from state liability insurance carriers and other defendants being sued by DOIT to ease the state's burden in settling the lawsuit. And depositors won't agree to anything less than their principal, along with the chance to pick up interest and principal by continuing their legal fight with parties that won't settle.
"We will get the best for them we can, and this (the latest offer) isn't it," Haley said, encouraging depositors to "hang tough."
About 15,000 depositors of five defunct thrift and loans had an estimated $106 million in deposits when the institutions were taken over by state regulators two years ago.
The thrifts are now in liquidation and depositors stand to lose $36 million in principal - $47 million including interest - of their savings. The lawsuit in 3rd District Court, alleging negligence and fraud by the state and several other defendants in running the thrift industry, seeks to recover that shortfall, plus an estimated $10 million to $20 million in legal fees.
Through liquidation, depositors have already received $39 million, and the state was seeking to bring together all parties in a "global solution" to returning the remaining amount.
But Finlinson told Republican Senators that third-party defendants, which include former thrift industry officials and their professional advisors, have refused to join in a settlement.
That refusal, coupled with the failure of getting enough from state liability coverage, accounted for the state's offer coming $10 million short of returning depositors their principal amount.
In his reported explanation to Republican Senators of the offer, Fin-linson said the governor proposed:
_ $33 million from the state issuing a general obligation bond.
_ $15 million to come from the three insurance carriers who covered the state from 1982 to 1985, while the state struggled to rescue the crumbling thrift industry.
_ $9 million from the State's Risk Management Fund, the self-insurance fund the state has operated since it dropped commercial liability coverage.
The bond would be financed by proceeds from continued liquidation of thrift assets, with an estimated value of $26 million; $5 million from assets of the defunct Industrial Loan Guaranty Corp., the private insurance fund lawmakers set up in 1975 to guaranty deposits in the state's thrifts; and $2 million from what is left of the $5 million the Legislature appropriated in 1986 to deal with the thrift issue.
The $9 million from the State's Risk Management Fund would have to be put back in the fund with an appropriation from the Legislature, Finlinson said.
The $15 million from former insurance carriers fell $10 million short of what Bangerter tried to get from them, said Finlinson, who has been close to negotiations as a member of a state-appointed task force assigned to find a resolution to the thrift crisis.
With $39 million depositors have already received through liquidation, the state's offer would return $96 million of their $106 million in total account principal.
"If you attach the going rates to the principal the past two years that the depositors have been without their money, you would come up with an additional $12 million in interest. Then there are attorney's fees," Finlinson told the caucus.
But DOIT counsel has said previously that depositors could agree to settle with the state by getting at least the $106 million principal amount, then collect interest and legal fees from judgments against other defendants who refuse to settle.
This marks the third proposed settlement of depositors claims to come forth this year. An initial offer to reimburse 75 percent of depositors principal was rejected last May.
Several weeks later neither Bangerter nor DOIT would accept a task force proposal, authored by Finlin-son, to reimburse 100 percent of depositors' principal, but not allow depositors to continue their case against other defendants. Bangerter said the proposal placed too much burden on taxpayers to settle the crisis and DOIT didn't like a clause that would have prevented them from seeking interest and attorney's fees from third-party defendants.
This latest rejection, however, doesn't mean negotiations have ceased. Haley said talks will continue with all parties in the suit and the state's former insurance carriers.
Bangerter said he was optimistic a settlement could be reached.