[The senators left at this point for another vote.]
[We resumed when Senators DeConcini, McCain, and Riegle returned.]
[We resumed when Senators DeConcini, McCain, and Riegle returned.]
CIRONA I also wanted to note that the Bank Board has had a lot of problems with Arthur Young, and is thinking of taking disciplinary action against it.
BLACK: Not for its actions here. Primarily because of its Texas office, which has never met a direct investment. They think everything is a loan. This has quite an effect on the income you can claim.
DECONCINI: And you’ll take control of them if they fail your net worth standard – you’ll take operational control of them.
CIRONA: That’s speculative. We’d take steps to reduce their risk exposure.
RIEGLE: What would require them to sell?
CIRONA: We’d probably have them decrease their growth. Time and again we’ve found rapid growth associated with loss. Lincoln has grown rapidly.
BLACK: Are you sure you want to talk about this? We haven’t made any recommendation to the Bank Board yet. The Bank Board decides what action to take. These are very confidential matters.
DECONCINI: No, then we don’t want to go into it. We were just asking very hypothetically and that’s how you [indicating Mr. Cirona] were responding.
CIRONA: That’s right.
DECONCINI: Can we do something other than liquidate them?
CIRONA: I hesitate to tell an association what to do. We’re not in control of Lincoln, and won’t be. We want to work the problem out.
McCAIN: Have they tried to work it out?
CIRONA: We’ve met with them numerous times. I’ve never seen such cantankerous behavior. At one point they said our examiners couldn’t get any association documents unless they made the request through Lincoln’s New York litigation counsel.
RIEGLE: Well, that does disturb me – when you have to go through New York litigation counsel. What could they do? Is it too late?
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