Election-year politics brought lawmakers into a legislative special session Wednesday, and election year politics kept them from making a decision on a thrift settlement.
Republicans couldn't decide what to do with Gov. Norm Bangerter's thrift-settlement package. In fact, there was so little agreement on the settlement that it never came to a vote, not on the floors of the House or Senate, not even in closed Republican caucuses.So legislators adjourned without even setting a firm date to reconvene on the thrift settlement. If they don't come back into session within 30 days and decide on the settlement, the special session call automatically ends and Bangerter would have to call another special session.
Sen. Fred Finlinson, R-Murray, sponsored SB2, the settlement bill, and was disappointed that fellow Republicans wouldn't side with him and Bangerter - a Republican governor in real political trouble this re-election year, according to polls.
Finlinson did get GOP leaders to promise that they will give an update on the thrift settlement renegotiations at next Wednesday's legislative interim day committee meetings. But that's all he could get them to promise.
Five points - particularly the millions of dollars depositors' attorneys stand to make - are holding up legislative approval of the settlement. Lawmakers may have to form a committee to take those concerns to depositors' attorneys, because Bangerter has said he won't renegotiate the settlement.
"I've done my job and negotiated a darn good deal. Now they should do their part," Bangerter said, irritated by what he termed "stalling tactics" by lawmakers nervous about making a tough decision near election day.
After months of negotiation, the state, with help from its former liability insurance carrier, has agreed to pay an estimated $60 million to settle allegations of fraud and negligence filed in the 3rd District Court by an organization of depositors, Depositors of Insured Thrifts.
The depositors' group says the state and thrift industry officials were responsible for the collapse of five institutions and the loss of millions in savings. Depositors have already recovered $40 million through a court-ordered liquidation of the thrifts.
To finance the $60 million settlement, Bangerter is asking lawmakers to issue a $31.7 million general-obligation bond, appropriate $7 million from the state's Risk Management Fund and $2 million more from the general fund. Former state insurance carrier California Union Insurance Co. has agreed to contribute $19 million.
The bond would eventually be paid off by liquidating assets of the five thrift and loans and the Industrial Loan Guaranty Corp. _ the insolvent deposit guaranty that was created by the state and triggered the collapse of the state's thrift industry. The Risk Management Fund, which would be depleted by the settlement, could be reimbursed through an appropriation during the general session in January.
Bangerter and depositors' attorneys have pleaded with lawmakers to not tamper with the carefully crafted settlement. But, as House Speaker Glen Brown, R-Coalville, said, "There are too many things we are uncomfortable with to go ahead and fund it. The Legislature isn't of the mind to say, `We don't have a say in this thing, we just write the check out.' "
The five issues holding up the settlement include: Attorney's fees, funding of the settlement, value of the thrifts' assets, indeminification of ILGC trustees, and a written settlement contract before it is approved.
Topping the list of concerns is the politically volatile question attorneys' fees, which isn't even addressed in Finlinson's bill.
Sen. Lyle Hillyard, R-Logan, summed up many lawmakers' feelings about the attorneys' fees: "My constituents are overwhelmingly against using taxpayers' money to bail out the thrifts. Their reaction to these kinds of fees will be so repulsive, especially when it (the state's liability) hasn't been decided in court."
Bangerter told legislative leadership before the special session that attorneys' fees were not addressed in the bill because it's up to the court to decide how much attorneys are paid in a class action suit.
Under a contract with depositors, a team of four lawyers could make between $6 million to $12 million on the case. Sen. K.S. Cornaby, R-Salt Lake, also an attorney, said that amount was excessive and he proposed having the bill cap the fees at $1 million.
Depositor attorney George Haley said he and his partners are willing to talk with lawmakers about the settlement, but they can't negotiate attorneys' fees. "Even with our contract, the final fee is determined by the court and neither we nor the Legislature can make the court's decision. I don't know why they are concerning themselves about our fees, it's none of their business."
But Bangerter's chief of staff Reed Searle said legislators are beleive the legal fees will cause "an emotional rise" among voters that lawmakers don't want to deal with, particularly after taking heat for financing the Great Salt Lake pumps and raising taxes.
He said legislators are concerned about facing voters once the media has spread the word that tax dollars went into attorneys' pockets.
At a press conference late Wednesday, Bangerter lashed out at lawmakers, accusing Republicans and Democrats alike of avoiding a tough decision close to election day.
"It's aggravating, regardless of the political party, when legislators don't face up to their responsibility," he said. "They should quit thinking about the election and do what they have to do."
The depositors have organized politically, and the governor and a number of legislators have been told in no uncertain terms that they won't get the depositors' votes unless a settlement is reached.