Utah lawmakers stumbled toward a thrift settlement Tuesday, and should have one by nightfall. Maybe.
Monday, just before midnight, the state Senate approved a thrift measure 18-11. But House members had already recessed for the night. Both houses will meet Tuesday afternoon, and House Democrats, who almost caused a breakdown in the session Monday because they didn't like what the Republicans were planning, say they'll likely go along with the Senate measure.The bill is similar to an accord reached by legislative leadership and thrift depositors' attorneys more than a week ago. The latest compromise measure is favored over another bill that depositors despised.
Under this latest settlement:
- The state appropriates $25 million to depositors. Lawmakers hope to get back $15 million of that money as the state and depositors split proceeds from the ongoing liquidation of thrift assets valued at $32.1 million.
- California Union Insurance Co., the state's former liability carrier, will contribute another $19 million toward the settlement.
_ Former trustees of the Industrial Loan Guaranty Corp. _ the insolvent thrift deposit insurance fund created by the state _ and the thrifts that have federal deposit insurance are protected by the settlement.
_ A panel is created to consider depositors' claims against officers of the failed thrifts and accounting and legal firms that audited and advised the thrift industry.
Thrift depositors have received more than $40 million of their savings through the court-ordered liquidation of thrift assets, and the new compromise, SB2, would enable depositors to recover about $60 million more. Depositors had an estimated $106 million in five thrift and loans before state regulators declared theILGC insolvent and shut down the five institutions in July 1986. About 15,000 depositors, organized under the name Depositors of Insured Thrifts, filed their class action against the state and thrift officials last year to recover their lost savings.
Monday's session, the fourth time in less than one month lawmakers had met to consider the thrift issue, was filled with haggling and strange occurrences.
House members voted on one technical bill, needed before the thrift settlement can be reached, three times. At one point, House members took action on the technical bill that repealed it before it could become law. Some representatives laughed over that, others just shook their heads in amazement.
Then, because House Democrats wouldn't give enough votes to approve the measure by the required two-thirds vote, House Republicans tried to adjourn. That would have ended the special session with no thrift settlement at all. But the Senate wouldn't accept adjournment.
So the leaders of both parties scurried down to Gov. Norm Bangerter's office and conducted new negotiations with the thrift depositor attorneys. A compromise was reached and the Senate approved the measure.
Finally, a bill was agreed on that is favored by most House Democrats. They successfully kept a second bill out of consideration earlier Monday. Part of the problem Democrats saw with that second proposal, nicknamed the "White Bill" because it was printed on white paper and no lawmakers publicly claimed it, was that their leadership had been excluded from the most recent negotiations.
"Political expediency only works when both parties are involved," House Minority Leader Mike Dmitrich, D-Price, told the first caucus of the day and repeated later on the floor of the House. The "White Bill" was proposed late last week after GOP legislative leaders met several times. Democrats and depositor attorneys didn't have any input into that measure, so both resented it.
Both supporters and opponents of the settlement legislation warned of consequences of either passing or not passing the new compromise bill.
"If this proposal passes late tonight it will come back to haunt us and haunt us," said Sen Lyle Hillyard, R-Logan. He and other opposing lawmakers said "bailing out depositors" with taxpayers' money sends the wrong message to the public when proposed tax-slashing initiatives are on the upcoming ballot.
Sen. Kay Cornaby, R-Salt Lake, said another measure _ which would have returned about $90 million to depositors and capped attorneys' fees at $1.5 million _ was the better compromise for all Utahns.
But a majority of senators knew that alternative wouldn't pass, and believed battling depositors in court could cost taxpayers more than the $10 million the state would eventually spend in settling.
"That is why I support it," said Senate President Arnold Christensen, R-Sandy.
Meanwhile, depositors were relieved the issue has finally been bumped off dead center after weeks of indecision.
"It's hard to say yes with the concessions we made," said depositors' attorney Bob Stolebarger, when asked if he was satisfied with what passed Monday. "But it's in the best interest of depositors."
"It's the best deal we can make under the circumstances," added depositors' co-counsel George Haley.
A major concession by depositors was allowing ILGC trustees and thrifts that now have federal deposit insurance off the hook.