Gibraltar Savings Association

Last updated

Gibraltar Savings Association was a Houston, Texas based savings and loan. Its failure and resolution was one of the most expensive in the savings and loan crisis at an estimated cost of $2.875 billion.

Houston City in Texas, United States

Houston is the most populous city in the U.S. state of Texas and the fourth most populous city in the United States, with a census-estimated population of 2.312 million in 2017. It is the most populous city in the Southern United States and on the Gulf Coast of the United States. Located in Southeast Texas near Galveston Bay and the Gulf of Mexico, it is the seat of Harris County and the principal city of the Greater Houston metropolitan area, which is the fifth most populous metropolitan statistical area (MSA) in the United States and the second most populous in Texas after the Dallas-Fort Worth MSA. With a total area of 627 square miles (1,620 km2), Houston is the eighth most expansive city in the United States. It is the largest city in the United States by total area, whose government is similarly not consolidated with that of a county or borough. Though primarily in Harris County, small portions of the city extend into Fort Bend and Montgomery counties.

Texas State of the United States of America

Texas is the second largest state in the United States by both area and population. Geographically located in the South Central region of the country, Texas shares borders with the U.S. states of Louisiana to the east, Arkansas to the northeast, Oklahoma to the north, New Mexico to the west, and the Mexican states of Chihuahua, Coahuila, Nuevo León, and Tamaulipas to the southwest, while the Gulf of Mexico is to the southeast.

The savings and loan crisis of the 1980s and 1990s was the failure of 1,043 out of the 3,234 savings and loan associations in the United States from 1986 to 1995: the Federal Savings and Loan Insurance Corporation (FSLIC) closed or otherwise resolved 296 institutions from 1986 to 1989 and the Resolution Trust Corporation (RTC) closed or otherwise resolved 747 institutions from 1989 to 1995.

Contents

Background

The thrift was founded as Gibraltar Savings and Building Association in 1921. [1] It was formerly owned by Imperial Corporation of America in San Diego, but was spun off to shareholders in 1981. [2] In 1984, Gibraltar Savings was acquired by First Texas Financial Corporation. FTFC, which had acquired First Texas Savings Association in Dallas in 1982, was controlled by nursing home developer J. Livingston Kosberg. [3] An investor in FTFC was lawyer and political power broker Robert S. Strauss, who owned 10% of the stock. His son, real estate developer Richard Strauss, joined the board and was active in running the thrift. [4]

San Diego City in California, United States

San Diego is a city in the U.S. state of California. It is in San Diego County, on the coast of the Pacific Ocean in Southern California, approximately 120 miles (190 km) south of Los Angeles and immediately adjacent to the border with Mexico.

Dallas City in Texas, United States

Dallas, officially the City of Dallas, is a city in the U.S. state of Texas and the seat of Dallas County, with portions extending into Collin, Denton, Kaufman and Rockwall counties. With an estimated 2017 population of 1,341,075, it is the ninth most-populous city in the U.S. and third in Texas after Houston and San Antonio. It is also the eighteenth most-populous city in North America as of 2015. Located in North Texas, the city of Dallas is the main core of the largest metropolitan area in the Southern United States and the largest inland metropolitan area in the U.S. that lacks any navigable link to the sea. It is the most populous city in the Dallas–Fort Worth metroplex, the fourth-largest metropolitan area in the country at 7.3 million people as of 2017. The city's combined statistical area is the seventh-largest in the U.S. as of 2017, with 7,846,293 residents.

Robert S. Strauss American diplomat

Robert Schwarz Strauss was a figure in American politics and diplomacy whose service dated back to future president Lyndon Johnson’s first congressional campaign in 1937. By the 1950s, he was associated in Texas politics with the conservative faction of the Democratic Party led by Johnson and John Connally. He served as the Chairman of the Democratic National Committee between 1972 and 1977 and served under President Jimmy Carter as the U.S. Trade Representative and special envoy to the Middle East. Strauss was selected by President George H. W. Bush to be the U.S. ambassador to the Soviet Union in 1991 and after the USSR's collapse, he served as the U.S. ambassador to Russia from 1991 until 1992. Strauss had advised and represented U.S. presidents over three administrations and for both major U.S. political parties.

Failure

Gibraltar Savings failed in December 1988, at which time it was the largest thrift in Texas. Under the Federal Home Loan Bank Board and Federal Savings and Loan Insurance Corporation's Southwest Plan, five failed Texas thrifts with total assets of $12.2 billion were combined. The five thrifts were Gibraltar Savings Association (with $6.3 billion in assets), First Texas Savings Association in Dallas ($3.2 billion), Home Savings and Loan Association in Houston ($568 million), Killeen Savings and Loan Association in Killeen ($256 million), and Montfort Federal Savings and Loan Association in Dallas ($1.8 billion). (Montfort was formerly Vernon Savings and Loan.) [5] [6]

Federal Home Loan Bank Board

The Federal Home Loan Bank Board (FHLBB) was a board created in 1932 that oversaw the Federal Home Loan Banks also created by the act. It was superseded by the Federal Housing Finance Board and the Office of Thrift Supervision in 1989.

The Federal Savings and Loan Insurance Corporation (FSLIC) was an institution that administered deposit insurance for savings and loan institutions in the United States. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) abolished it and transferred the responsibility for savings and loan deposit insurance to the Federal Deposit Insurance Corporation (FDIC). The FSLIC Resolution Fund was created to assume all the assets and liabilities of the FSLIC, which was to be funded by the Financing Corporation (FICO).

Killeen, Texas City in Texas

Killeen is a city in Bell County, Texas, United States. According to the 2010 census, its population was 127,921, making it the 21st-most populous city in Texas. It is the principal city of the Killeen–Temple–Fort Hood Metropolitan Statistical Area.

Sale

In a controversial deal, the thrifts were sold in December 1988 to MacAndrews & Forbes Holdings Inc., (owned by Ronald Perelman) and Gerald J. Ford for $315 million, with the government spending $5.1 billion as their side of the transaction. As part of the sale, the investment group gained about $1 billion in tax benefits. The transaction was one of several sales of failed Texas thrifts that took place in the last days of 1988, as the special tax breaks were due to expire on January 1, 1989. [7] The estimated resolution cost by the federal government for Gibraltar Savings Association was $2.875 billion, and $2.545 billion for the affiliated First Texas Savings Association, or a total combined cost of $5.42 billion. [8]

MacAndrews & Forbes Incorporated is an American diversified holding company wholly owned by billionaire investor Ronald Perelman. Current investments include leading participants across a wide range of industries, from cosmetics and entertainment to biotechnology and military equipment.

Ronald Perelman Businessman, investor

Ronald Owen Perelman is an American banker, businessman, investor, and philanthropist. MacAndrews & Forbes Incorporated, his company, has invested in companies with interests in groceries, cigars, Liquorice, makeup, cars, photography, television, camping supplies, security, gaming, jewelry, banks, and comic book publishing.

Gerald J. Ford is an American businessman.

Revival and eventual sale

The thrift was reopened as First Texas Bank F.S.B., but then renamed First Gibraltar Bank, F.S.B. in 1989. BankAmerica Corp. acquired 130 branches of the thrift in 1993. [9] Four branches were retained and renamed First Madison Federal Savings Bank, which then purchased First Nationwide Bank in 1994, California Federal Bank in 1997 and Glendale Federal Bank in 1998. [10] In 2002 the thrift, by then renamed CalFed Bank, was purchased by Citigroup. [11]

Bank of America American multinational banking and financial services corporation

The Bank of America Corporation is an American multinational investment bank and financial services company based in Charlotte, North Carolina with central hubs in New York City, London, Hong Kong, Minneapolis, and Toronto. Bank of America was formed through NationsBank's acquisition of BankAmerica in 1998. It is the second largest banking institution in the United States, after JP Morgan Chase. As a part of the Big Four, it services approximately 10.73% of all American bank deposits, in direct competition with Citigroup, Wells Fargo, and JPMorgan Chase. Its primary financial services revolve around commercial banking, wealth management, and investment banking.

California Federal Bank, known as CalFed, was a bank headquartered in Los Angeles, California at 5670 Wilshire Boulevard. It operated 352 branches, most of which were in California. In 2002, the bank was acquired by Citigroup.

Citigroup American multinational investment bank and financial services corporation

Citigroup Inc. or Citi is an American multinational investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking giant Citicorp and financial conglomerate Travelers Group in 1998; Travelers was subsequently spun off from the company in 2002. Citigroup owns Citicorp, the holding company for Citibank, as well as several international subsidiaries.

Related Research Articles

Washington Mutual, Inc., abbreviated to WaMu, was a savings bank holding company and the former owner of Washington Mutual Bank, which was the United States' largest savings and loan association until its collapse in 2008.

Washington Federal

Washington Federal is a Washington Corporation headquartered in Seattle, Washington. The Company is a bank holding company that conducts its operations through a federally insured national bank subsidiary, Washington Federal, National Association ("Bank").

A savings and loan association (S&L), or thrift institution, is a financial institution that specializes in accepting savings, deposits, and making mortgage and other loans. The terms "S&L" or "thrift" are mainly used in the United States; similar institutions in the United Kingdom, Ireland and some Commonwealth countries include building societies and trustee savings banks. They are often mutually held, meaning that the depositors and borrowers are members with voting rights, and have the ability to direct the financial and managerial goals of the organization like the members of a credit union or the policyholders of a mutual insurance company. While it is possible for an S&L to be a joint-stock company, and even publicly traded; in such instances it is no longer truly a mutual association, and depositors and borrowers no longer have membership rights and managerial control. By law, thrifts can have no more than 20 percent of their lending in commercial loans — their focus on mortgage and consumer loans makes them particularly vulnerable to housing downturns such as the deep one the U.S. experienced in 2007.

Office of Thrift Supervision

The Office of Thrift Supervision (OTS) was a United States federal agency under the Department of the Treasury that chartered, supervised, and regulated all federally chartered and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of another federal agency. Like other U.S. federal bank regulators, it was paid by the banks it regulated. The OTS was initially seen as an aggressive regulator, but was later lax. Declining revenues and staff led the OTS to market itself to companies as a lax regulator in order to get revenue.

Standard Federal Bank

Standard Federal Bank was a Troy, Michigan-based bank serving Michigan and Northern Indiana in the United States which was acquired by Bank of America on 5 May 2008.

Great Western Bank was a large retail bank that operated primarily in the Western United States. Great Western's headquarters were in Chatsworth, California. At one time, Great Western was one of the largest savings and loan in the nation, second only to Home Savings of America. The bank was acquired by Washington Mutual in 1997 for $6.8 billion.

H.F. Ahmanson & Co. was a California holding company named after millionaire Howard F. Ahmanson, Sr. It was best known as the parent of Home Savings of America, once one of the largest savings and loan associations in the United States.

Beal Bank

Beal Bank is an American bank, which was founded by Texas-based entrepreneur D. Andrew "Andy" Beal. It includes two separately chartered banks, Beal Bank and Beal Bank USA. Each entity is insured by the Federal Deposit Insurance Corporation (FDIC).

Western Savings and Loan was an American financial institution founded by the Driggs family.

The subprime mortgage crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. It includes United States enactment of government laws and regulations, as well as public and private actions which affected the housing industry and related banking and investment activity. It also notes details of important incidents in the United States, such as bankruptcies and takeovers, and information and statistics about relevant trends. For more information on reverberations of this crisis throughout the global financial system see Financial crisis of 2007–2008.

The government interventions during the subprime mortgage crisis were a response to the 2007–2009 subprime mortgage crisis and resulted in a variety of government bailouts that were implemented to stabilize the financial system during late 2007 and early 2008.

Gibraltar Savings and Loan Association was an American bank operating in California, Washington, and Florida. It was organized as a savings and loan and failed in 1989.

Capitol Federal Savings Bank

Capitol Federal Savings Bank is a federally chartered and insured savings bank founded in 1893 and is headquartered in Topeka, Kansas. Capitol Federal currently has 37 branch locations and 10 in-store branches, serving primarily the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia and Salina, Kansas and both the Kansas and Missouri sides of the greater Kansas City metropolitan area.

Bank United Corporation, headquartered in Houston, Texas, was a broad-based financial services provider and the largest publicly traded depository institution headquartered in Texas before its merger with Washington Mutual in 2001. Bank United Corp. conducted its business through its wholly owned subsidiary, Bank United, a federally chartered savings bank. The company operated a 155-branch community banking network in Texas, including 77 in the Dallas/Fort Worth Metroplex, 66 in the greater Houston area, five in Midland, four in Austin, and three in San Antonio; operated 19 SBA lending offices in 14 states; was a national middle market commercial bank with 23 regional offices in 16 states; originated mortgage loans through 11 wholesale offices in 10 states; operated a national mortgage servicing business serving approximately 324,000 customers, and managed an investment portfolio. As of June 30, 2000, Bank United Corp. had assets of $18.2 billion, deposits of $8.8 billion, and stockholder's equity of $823 million.

CenTrust Bank, A State Savings Bank was a Miami, Florida-based savings and loan. Its failure in 1990 was one of the largest and costliest failures of the savings and loan crisis.

American Savings and Loan Association was a Stockton, California based savings and loan. It was the largest thrift failure and the federal government's costliest resolution during the savings and loan crisis at an estimated cost of $5.4 billion.

References

  1. ↑ Rock Bottom by Peter Elkind Texas Monthly June 1989
  2. ↑ Imperial's Texas Unit Being Sold New York Times July 31, 1981
  3. ↑ Talking Business With Kosberg of First Texas; Thrift Industry Under Scrutiny New York Times May 6, 1986
  4. ↑ A Savings Fiasco in Texas Ends at a Fire-Sale Price New York Times June 22, 1990
  5. ↑ Bank Board announces two major thrift acquisitions UPI December 28, 1988
  6. ↑ $5 billion bailout planned for 5 S&Ls Chicago Tribune December 28, 1988
  7. ↑ The Screwiest S&L Bailout Ever. After wealthy Texans ran the huge thrift into the ground, the feds sold it to billionaire Ronald Perelman for a song. Fortune magazine June 19, 1989
  8. ↑ The Savings and Loan Crisis: Lessons from a Regulatory Failure. edited by James R. Barth, S. Trimbath, Glenn Yago. Springer. 2004. p150
  9. ↑ BankAmerica completes First Gibraltar deal UPI February 1, 1993
  10. ↑ Investor Perelman Still Benefits from '88 Deal Los Angeles Times September 19, 1994
  11. ↑ Citigroup to Buy Parent of Cal Fed Los Angeles Times May 22, 2002

Further reading

International Standard Book Number Unique numeric book identifier

The International Standard Book Number (ISBN) is a numeric commercial book identifier which is intended to be unique. Publishers purchase ISBNs from an affiliate of the International ISBN Agency.

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.