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California: News and Insight on Business in the Golden
State | THE STATE / BANKING

Cal Fed 'Goodwill' Suit Seeks $1.6 Billion

October 09, 1998|Bloomberg News

Golden State Bancorp Inc.'s California Federal Bank asked a judge for more than $1.6 billion in damages in its "supervisory goodwill" lawsuit against the U.S. government. The damages request, which asks for more than many analysts and investors expected, could give a boost to other litigants seeking as much as $30 billion in 120 separate cases. The aggressive bid could also pave the way for other lawsuits. The complaints charge that the government breached contracts that it made with S&Ls and their owners during the 1980s to induce purchases of other, failing thrifts. Cal Fed had to write off $485 million in goodwill, which it had accumulated through acquisitions. Although a federal judge in July said the government was liable to Cal Fed, the company kept its damages request secret until this week, when it filed a set of expert-witness reports with a Washington court. The company's damage trial is set to begin Dec. 7. Golden State shares fell 50 cents to close at $11.94 on the NYSE.

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