A national housing advocacy group sued the Federal Home Loan Bank Board on Thursday, charging the thrift regulatory agency with failing to produce information about the proposed sale of six failing savings and loan firms last fall.
The lawsuit was filed in federal court in Dallas by Acorn, an activist group known formally as the Assn. of Community Organizations for Reform Now.
In a press release, the plaintiffs emphasized that the public has a right to know about such deals if U.S. taxpayer money must be used to take care of failures in the thrift industry.
"We would argue if we're being kept in the dark about the details, then the public is not really being represented," Acorn member Elena Hanggi said. The Bush Administration has estimated that about $40 billion in taxpayer money will be needed to clean up the mess in the thrift industry during the next 10 years.
The lawsuit also represents another challenge to the authority of the Federal Home Loan Bank Board, which has been under heavy criticism in recent weeks. The agency is the primary regulatory agency for the nation's 3,000 savings and loans.
Congress has been critical of the manner in which the bank board handled more than 200 thrift failures in 1988, charging that many were badly handled and amounted to government giveaways. And President Bush has recommended that the bank board be taken over by the Treasury Department.
The Acorn suit charges that regulators turned down the group's request to see records pertaining to failing thrifts in Arkansas, where Acorn is headquartered.
The request was made Nov. 1 under provisions of the Freedom of Information Act, which gives the public access to certain government records. It sought to find out how much investors had bid for the thrifts and what inducements were being provided to sell the firms. Regulators almost always keep that kind of information, known as bid packages, private.
Although the suit pertains only to thrifts in Arkansas, Acorn officials said the suit has national importance in light of the controversy swirling around the bank board. "It seems particularly important when you have these sweetheart deals that are being called into question," said M. Fred Friedman, an attorney in Chicago who filed the suit.
Other defendants include the Federal Home Loan Bank of Dallas, which supervises the Arkansas thrifts, and M. Danny Wall, chairman of the bank board. "Our position is that bid packages are not subject to Freedom of Information requests," a spokesman for the bank board said.