Headline:The Case Against Hurwitz In one of the last big S&L cases from the '80s, two federal agencies are pursuing Charles Hurwitz over the failure of united Savings. And for once, Hurwitz may have no place to hide.

You can separate Hurwitz's legal opponents into three basic camps: In the first are the dispassionate feds, pursuing Hurwitz for alleged S&L improprieties and violations of financial laws. In the second are the environmentalists, trying to protect the vanishing old-growth redwoods. And in the last camp are an assortment of litigants ranging from disgruntled race track investors like Jim "Mattress Mac" McIngvale and attorney John O'Quinn to other federal agencies, such as the U.S. Department of Labor and the Environmental Protection Agency.

At present, it's the actions growing out of United Savings' failure that likely are giving Hurwitz the greatest cause for concern.

"We're at the tail end of the S&L crisis [with this case]," says Bert Ely, a thrift industry analyst who frequently testifies as an expert witness in big federal cases. "My sense is this is one of the biggest actions they've brought, and Hurwitz is one of the bigger fish."

Most Americans suffer from forced amnesia on the subject of the Great S&L Scandal of the 1980s. Few understood it; fewer still were able to connect it to their personal lives. But the more than $150 billion tab for bailing out insolvent thrifts played a major role in the astounding buildup of the national debt that occurred in the late 1980s. The savings and loan industry itself virtually disappeared as well, with the number of thrifts plunging from more than 4,000 15 years ago to about 1,500 today. In Texas, the number of S&Ls fell from more than 250 in the early 1980s to just 47.

Houstonians have better memories than most Americans when it comes to the S&L debacle. The city's real estate scene was devastated by the tidal wave of construction activity unleashed by hyperactive developers with a line to cash-happy S&L chiefs. Office buildings, shopping centers, apartment complexes and master-planned communities sprang up where there was no good reason for them, and waves of foreclosures began to roll blackly across the landscape. Coupled with the free-falling price of oil and the crashing Mexican peso, real estate values got killed. It didn't happen only in Texas, of course, but the resultant distress here was among the deepest and most widespread.

"It's like when people say, 'Guns don't kill people, people do,' " suggests Texas bank analyst Frank Anderson. "Well, the thrifts were the guns."

The charges lodged against Hurwitz by the FDIC last August and against Hurwitz and his United Savings colleagues by the OTS in late December dredge up the worst of the excesses of the '80s: corporate raiders, junk bonds, hostile takeovers, Michael Milken, Ivan Boesky, see-through office buildings, rampant foreclosures and imploding S&Ls.

Nearly all of these came together in Maxxam's 1986 acquisition of Pacific Lumber, which forever linked Hurwitz to the fate of the California redwoods, and which was accomplished, regulators claim, with funds misappropriated from United Savings.

Indeed, of all the players involved in the Pacific Lumber takeover -- Michael Milken, Drexel Burnham Lambert, Boyd Jefferies, Ivan Boesky, Charles Hurwitz and Maxxam -- only Hurwitz and Maxxam have not been convicted in criminal court.

Until Hurwitz came along and acquired control of its parent company, United Financial Group, United Savings was a sleepy, unimaginative S&L much like the one Jimmy Stewart ran in the movie It's a Wonderful Life. But under Hurwitz's direction, the thrift abandoned its traditional residential lending business and plunged headlong into the risky waters of commercial real estate lending and development and started investing heavily in high-risk junk bonds and slippery instruments called mortgage-backed securities. When United Savings failed in December 1988, it hadn't made a home loan in three years, but it had managed to lose more than $275 million on ill-advised financial investments. Meanwhile, losses in its commercial real estate division were piling up faster than corpses in an Ebola epidemic.

Here's how the FDIC sums up a big chunk of its case: "Under Hurwitz's control, the financial condition of United Savings steadily deteriorated. As the institution's financial health plummeted, Hurwitz, senior officers and United Savings board members serving at Hurwitz's request undertook greater and greater risks until both the officers and board members became entirely indifferent to losses the institution might incur. Rather than recognize United Savings' problems and confront them constructively, Hurwitz: (a) dramatically increased the liabilities of the association in violation of federal law; (b) gambled on large, cumbersome real estate projects with no realistic chance of success; and (c) invested in complex financial instruments which the officers understood poorly and which resulted in staggering losses to the association."

Why would Hurwitz do such a thing? Well, both the FDIC and OTS believe he needed to make United Savings' balance sheet look as fat as possible so he could utilize the thrift's assets to finance Maxxam's takeover raids.

In the mid-'80s, Maxxam's corporate assets weren't large enough to support borrowing the half-billion dollars Hurwitz needed to take over Pacific Lumber. But by throwing United Savings' $5 billion in assets onto the pile -- through a little reciprocal bond trading with Drexel Burnham's Milken -- Hurwitz would have more than enough to fund his big deal.

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