WASHINGTON -- The government Tuesday took another savings and loan off its list of troubled institutions, forcing it to merge with a stronger partner to form the largest thrift institution in South Dakota.
The Federal Home Loan Bank Board announced it had invested some government insurance funds into the acquisition of Perpetual Savings and Loan, Rapid City, S.D., by First Federal Savings and Loan, also of Rapid City.
According to its policy, the bank board does not disclose the amount of insurance funds used to make the merger possible. Much of whatever insurance funds are used are eventually recovered by the government.
Bank board Chairman Richard Pratt recently said -- as of the end of May -- 363 or more institutions were on the federal regulators' list of ailing associations under close government scrutiny. In addition, the regulators keep a list of far fewer institutions on a so-called 'critical' list. The names of associations on the lists are not officially confirmed until a merger is announced.
On Sept. 8 the government removed three of the largest savings associations in the country from its troubled institutions list. New York's West Side Federal and Miami's Washington Savings and Loan were acquired by Citizens Savings and Loan in San Francisco with the help of a massive investment by Citizen's owner, National Steel. The Federal Savings and Loan Insurance Corporation committed itself to making an eventual financial contribution to the resulting association, the first such interstate merger to be authorized.
And New York's Franklin Society Federal Savings and Loan Association was acquired by First Federal of Rochester, N.Y., with the FSLIC issuing promissory notes in return for some income capital certificates.
So far this year only one savings association has been liquidated, a small Chicago institution. Regulators say its depositors, including those with savings above the $100,000 federally insured level, were protected from any loss.
Savings and loan institutions have been squeezed by the high cost of attracting deposits and the often sharply lower level of income from older home mortgages. A variety of remedies is being implemented by government, including the sale of tax-exempt 'All Savers' certificates beginning October 1.