CHICAGO -- Illinois Attorney General Neil Hartigan filed suit Monday to stop final approval of Citicorp's acquisition of First Federal Savings and Loan Association.
Hartigan charged two federal agencies ignored consumers' interests in tentatively approving the deal. His suit also claimed Illinois authorities were not consulted when the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corp. accepted the New York holding company's bid to acquire First Federal on Dec. 15.
Hartigan filed the suit -- asking for a stay of the two federal agencies' approval -- in the U.S. Court of Appeals for the 7th Circuit in Chicago.
The attorney general said he had requested detailed information on the decision 'for months,' but had received nothing before the Dec. 15 decision.
The lack of information meant his office 'had no way' to judge the impact of the decision on the state's economy, Hartigan said in a statement.
Federal law requires the FSLIC to consider the interests of the state in which a troubled savings and loan is located before approving a sale, Hartigan said.
He also warned the Citicorp takeover would concentrate power-to-lend in an 'enormous bank holding company outside Illinois.'
'All we know is that we are going to have either a new bank with 61 branches or a $140 billion savings and loan institution competing against every Illinois financial institution,' he said.
Citicorp won a bid Dec. 16 for another troubled savings association, the Miami-based New Biscayne Federal Savings and Loan. That acquisition, plus the ailing $3.9 billion First Federal, would bring Citicorp's asset strength to nearly $136 billion.
First Federal would also bring Citicorp 61 branch offices throughout Illinois.
The Federal Reserve has scheduled an informal hearing in the First Federal case Wednesday in Washington.
Final approval could have 'a profound, unavoidable impact on the fundamental structure of the Illinois system of banking by circumventing the Illinois prohibition against branch banking,' Hartigan said.
The 1970 Illinois constitution incorporated a state law against branch banking that has been on the books since 1923.
Hartigan charged he had asked for information on the acquisition in July 1983, but heard nothing. When he later requested a copy of the Dec. 15 decision, he said he received 18 pages -- 17 of which had been 'whited out.'
'Under the circumstances, the only course of action available to us to protect the public interest is the remedy we are seeking,' Hartigan added.
Attorney Don Reuben of Chicago has been appointed as a special assistant attorney general to assist in the case.
