The Treasury Department’s bank regulatory agency has filed charges against Houston-based Maxxam Inc., its chairman, Charles Hurwitz, and others for allegedly contributing to the failure of a Texas savings and loan.
The Office of Thrift Supervision filed 13 claims in an administrative court Monday, charging that Hurwitz, chairman, CEO and major stockholder of Maxxam, which owns Kaiser Aluminum & Chemical Co., Pacific Lumber Co. and various other businesses, violated federal regulations and conducted “unsafe and unsound practices.”
Kaiser is Spokane County’s largest manufacturing employer.
A spokesman for Maxxam, Bryan K. Oakley, issued a statement Monday saying the corporation hadn’t yet seen the charges.
“However, there is no basis for any claim or charge against Maxxam Inc.,” Oakley said. “The notice of charges issued by OTS is totally without merit, and Maxxam Inc. will vigorously appeal this proposed administrative action to the courts.”
The complaint doesn’t specify the amount of money sought in restitution for the $1.6 billion failure of United Savings of Texas in 1988, the fifth-largest failure in U.S. history.
But the claims attribute losses from unsound mortgage-backed securities, real estate ventures and employee compensation, among other practices, in excess of $485 million.
Additionally, the agency, which regulates banks and thrifts, seeks $839,000 in penalties for alleged violations of banking regulations.
If Maxxam and Hurwitz are ordered to pay restitution, a dozen California environmental groups want the assets in the form of old-growth redwood trees.
Pacific Lumber owns about 6,000 acres of the last old-growth redwoods remaining outside of public parks, including the pristine 3,000-acre Headwaters Forests, 15 miles inland from Eureka, Calif.
In August, the Federal Deposit Insurance Corp., a bank and thrift insurer, filed a $250 million claim against Hurwitz for his role in the failure of United Savings. The FDIC paid $1.6 billion from a federal insurance fund for the collapsed thrift.
Environmentalists in Humboldt County, Calif., and in Washington, D.C., greeted the news of the regulatory agency’s filing with satisfaction.
“We’re thrilled that the federal government is pursuing this enforcement action,” said Julia Levin, a lawyer with the Natural Heritage Institute in Washington. “We hope during the course of the negotiations, the federal government continues to look for ways to protect the Headwaters Forest, including a debt-for-nature swap or a federal land exchange.”
Since October, representatives from the Interior, Justice and Treasury departments, Office of Management and Budget, and Council on Environmental Quality have met twice to discuss mechanisms to protect the old growth, including a land exchange or a swap for any debt that Maxxam or Hurwitz might incur if the federal complaints are successful, Levin said.
Besides Hurwitz, others named are Barry A. Munitz, Jenard M. Gross, Arthur S. Berner, Ronald Huebsch and Michael Crow, all present directors or officers of United Savings.
Federated Development Co., a New York business trust also controlled by Hurwitz, is named in the complaint.