Consolidated Savings Bank, a small Irvine savings and loan institution run by a man who has been fiercely critical of industry leaders and regulatory policies, was declared insolvent and seized Thursday by state and federal regulators.
It was the 16th S&L in the nation and the sixth in the state to fail this year.
The Federal Savings and Loan Insurance Corp. was named conservator to continue running Consolidated as a state-chartered savings bank. A spokesman for the Federal Home Loan Bank Board said the S&L, which had $84.3 million in assets, "had substantially dissipated its assets and earnings" through a series of risky or prohibited practices, including loaning money to insiders.
All depositors will have access to their accounts, including balances exceeding the $100,000 limit insured by FSLIC, said David Loveday, spokesman for the bank board, the federal regulatory agency that oversees FSLIC and all FSLIC-insured S&Ls.
The bank board hired Household Bank, a federally chartered S&L in Newport Beach, to operate Consolidated.
The bank board said Consolidated's problems were partly the result of a rapid growth strategy in 1985, largely through the use of high-cost jumbo certificates of deposit, "which were used to fund risky and poorly underwritten commercial loans." Consolidated also engaged in "numerous unsafe and unsound practices and regulatory violations, including making loans to affiliated persons, " the spokesman said.