S&L; in Calif. seized, ending 18-month slide


BEVERLY HILLS, Calif. -- Columbia Savings & Loan, which once boasted of being the best-run U.S. savings and loan, was seized by government regulators Friday, ending a dizzying 18-month collapse of the maverick thrift that ultimately could cost taxpayers more than $1.5 billion.

The seizure of the thrift, which collapsed largely because of massive losses on its "junk" bonds, ends another chapter in the spectacular demise of financier Michael Milken's once-powerful junk-bond machine, of which Columbia was a critical component.

The takeover came as regulators rejected two bids to buy the thrift's junk bonds, valued at $2.1 billion as of Dec. 31. The two bidders were thought to be Goldman, Sachs & Co. and 7/8 7/8 TC Canadian-led partnership called Gordon America.

Officials with the federal Office of Thrift Supervision, the primary S&L; regulator, said that the bidders offered too little money as a down payment and would have received overly generous cash flows from the junk bonds.

In a statement, OTS Director Timothy Ryan said the buyers would have received a disproportionate share of benefits if the junk-bond market recovered and had little to lose if the market continued falling.

Customers are expected to be unaffected by the seizure, and Columbia's 23 branches will be open their usual hours. As with any bank or thrift taken over by regulators, accounts are insured for up to $100,000. Columbia is the nation's 16th-largest thrift.

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