Expecting A Big Check From Uncle Sam
On July 1, the Supreme Court handed Stephen Trafton the win of his career. Since taking over as CEO of troubled Glendale Federal Bank in 1992, Trafton poured as much as $5 million of the Ssuperscript&L's money and untold hours into a high-profile breach-of-contract case against Uncle Sam. Now, the Supreme Court has ruled in his favor.
At issue was the government's decision to rewrite accounting rules for buyouts of troubled thrifts. Trafton argued that the move cost Glendale $1.5 billion because it forced it to write off $700 million--from an acquisition of a failed thrift that the government encouraged--in just six years instead of the 40 the government originally promised.
Cheering from the sidelines are some 120 other Ssuperscript&Ls, some now closed, that have similar suits pending. The government could end up repaying them as much as $10 billion. The ruling came while Trafton was with his son climbing Colorado's peaks. So he should be in fighting trim for the upcoming damages trial. Says Trafton: "Our ability to be flexible in any settlement is very limited."