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Were These Deals Too Sweet To Last?

Talk about a honey-coated deal. In 1988, Robert M. Bass Group Inc. paid just $400 million to take over failing American Savings Bank, with its $16.5 billion in assets. To sweeten the arrangement, federal regulators threw in tax breaks and subsidies worth $3 billion to the thrift. Since then, Texas investor Robert M. Bass and his partners have garnered an estimated $244 million in profits from Irvine (Calif.)-based American, already recouping more than half their investment.

The Bass deal was among 199 savings and loan rescues in 1988, the thrift crisis' first big wave of bailouts. Sizable government subsidies to many of the buyers touched off vitriolic criticism, which helped produce a massive shakeup in federal thrift regulation in 1989. Congress is still upset by the hefty return some buyers have been receiving on their investments. To Representative Jim Leach (R-Iowa), a House Banking Committee member, the deals are "morally repugnant."