Another S&L; victim

I WAS invited to become a savings and loan director in 1972 Accepting that invitation was the worst decision of my life.

I was president of Towson State University when I was asked by the chairman of Baltimore Federal Financial (then Baltimore Federal Savings and Loan) to serve on its board. I was pleased and a bit flattered, and, after advising the chairman that I was no expert on banking or lending, I accepted.


A modest honorarium was attached, which I was happy to accept after having served on countless boards without fee. And now, 20 years later and semi-retired, my entire life's accumulation is being threatened because of that decision.

The S&L; failed in 1988 and was taken over by the Federal Home Loan Bank Board. Although I had read materials, listened to experts, participated in discussions and attended monthly meetings in good faith, today I am a defendant in a $32 million lawsuit brought by the federal government. I am not being charged with dishonesty, but rather with "negligence" and "breach of fiduciary duty," terms that were foreign to me until the suit was filed.


At first, I could not believe that the suit was serious. While all of my private financial records were subpoenaed and I underwent an eight-hour deposition, I was cooperative and forthcoming. I thought the private law firm retained by the government was checking for evidence of fraud or self-dealing, and I knew I was clean and thought my associates on the board were, too. Indeed, I was confident that the investigation would come to nothing until I received a certified letter on Jan. 15, 1992, naming me in the lawsuit. I was shocked and, finally, fearful and angry.

I met with representatives of nine different law firms and found that fees for defending me started at about $14,000 a month and could accumulate quickly to six figures -- all assuming I prevailed in the case. In short, I would have won, but I would have been wiped out. I decided to represent myself.

To date, after more than 1,200 hours of research and writing and filing my own legal motions, memorandums and "answers," this is the sum of what I have found:

Virtually all authorities, including economists, agree that the savings and loan debacle was made possible by the federal government, which provided perverse incentives that encouraged S&Ls; to enter commercial real estate ventures.

After the Carter administration passed deregulation in 1980, S&Ls; could offer higher rates than they were earning on old, largely residential mortgages. In 1981, President Reagan's tax-cut package included incentives for the construction of office buildings and apartments. There was a loan rush. S&Ls; were happy to oblige. Later, as the economy shifted about 1985 and the government withdrew the incentives in 1986, developers were unable to pay their loans, and S&Ls; were left with the debt. Now, the same government wants to hold hundreds if not thousands of S&L; directors responsible for the conditions it fostered.

Indeed, there was fraud and self-dealing. Such a frenetic environment invited excessive and deviant behavior, and those cases (estimated at from 5 percent to a quarter of the total) should be prosecuted to the fullest extent. In hindsight, authorities agree that few professionals in the S&L; business, let alone non-employee directors, really knew what they were doing, and now the government is lumping all of us together.

By now, 1,000 S&Ls; have failed, another 1,000 are seriously weakened and may go under. The cost to taxpayers will be well over $500 billion. God knows how many suits will be filed.

In the same big-government spirit, Congress in 1989 approved new laws, notably the Financial Institutions Reform, Recovery and Enforcement Act, out of which came the agency pressing the case against me, the Resolution Trust Corporation (RTC).


To date, the RTC has yet to pass the test of "expert" external review even by other government agencies. Its books were declared "unauditable" by the U.S. controller general. Two government reports later declared that the RTC had let over $700 million in legal contracts without proper negotiation or bidding, and the RTC has changed directions so many times that today no one is certain who is doing what.

RTC officials bring charges against one another, and politicians line up on both sides. In at least one instance, the RTC admitted retaining a law firm to represent the government in a case against an S&L; in which two of the senior partners in the firm were deeply involved. Another division of the RTC is currently investigating the law firm!

And so at the age of 61 and after a lifetime laced with volunteer public service, I am disillusioned, my life threatened by an irrational creature of government that may not be checked in time to save me.

James L. Fisher now lives in McLean, Va.