S&L; Bankruptcy Suit Stripped Of Punch Rep. Henry Hyde Among Former Directors Charged In Case

The federal government’s two-and-a-half-year-old lawsuit here blaming Rep. Henry Hyde, the powerful head of the House Judiciary Committee, and 11 other former directors of Clyde Federal Savings & Loan Association for the thrift’s bankruptcy appears to be losing steam.

Last week, U.S. District Court Judge Brian B. Duff threw out most of the charges against the directors. He ruled that the only basis for going to trial was an allegation of gross negligence, perhaps the hardest to prove of all the charges the government had put forward.

With no order entered setting up a schedule for pretrial discovery, or even a date to discuss such an order, progress in the slow-moving case seems to have ground to a halt, at least temporarily.”There’s no problem defeating the case if it goes to trial, but this last decision pretty much ends it for Henry,” Harte said.

A spokesman for the Resolution Trust Corp., the government’s representative in the case, said it was unclear what would happen next, in part because the agency is to be dissolved at the end of the month and its work turned over to the Federal Deposit Insurance Corp.

The RTC, the government agency created to clean up the mess left by widespread failures of savings and loan associations in the 1980s, charged that lax oversight by Clyde Federal’s board contributed to a series of questionable deals and investments that led to the bank’s collapse in 1990. The subsequent bailout by the agency cost taxpayers an estimated $67 million. The agency is suing the directors for $17.2 million.

Clyde Federal was based in North Riverside, Ill., one of the many western suburbs in Hyde’s congressional district.

Hyde, 71, joined the board in 1981 shortly after resigning his seat on the House Banking Committee. He resigned from the bank board three years later.