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BANKING / FINANCE : U.S. Regulators Running Lincoln S&L Hire Manager to Liquidate Junk Bonds

June 28, 1989|James S. Granelli, Times staff writer

Federal regulators running Lincoln Savings & Loan have hired a former Orange County thrift executive to liquidate much of Lincoln's junk bond portfolio, which consists of more than $400 million in high-risk, high-yield corporate bonds.

Kevin Becker, 31, will sell the junk bonds over the next year in his role as manager of Irvine-based Lincoln's $1.7-billion securities portfolio, which also includes less-risky bonds that are backed by home mortgages.

Becker will be working out of Lincoln's administrative offices in Phoenix, a few steps away from the S&L's parent firm, American Continental Corp.

Lincoln's junk bonds will not be sold at fire-sale prices, nor will all of them necessarily be sold, said Mark Randall, the Federal Deposit Insurance Corp. agent managing the S&L.

Much of the proceeds from the junk bond sales will go toward defraying expenses that have been increasing the deficit at Lincoln, he said. The S&L slipped into insolvency last month.

The S&L's deficit--liabilities in excess of assets--was more than $150 million at the end of May, according to William J. Crawford, commissioner of the California Department of Savings and Loan.

Regulators seized Lincoln on April 14, saying that American Continental was operating the S&L unsafely and dissipating its $5.3 billion in assets. American Continental had filed a bankruptcy petition the previous day to protect itself from creditors while it tried to reorganize its debts under Chapter 11 of federal bankruptcy laws.

Becker has worked for regulators for the last 3 1/2 years at the insolvent Security Savings & Loan in Scottsdale, Ariz. Previously, he was an assistant controller at Western Empire Savings & Loan in Yorba Linda and a chief financial officer at Brookside Savings & Loan in Los Angeles.

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