The government Tuesday agreed to a $39 million settlement with a unit of Conseco Inc. that may mark a turning point in cases involving billions of dollars in claims arising from the savings and loan cleanup in the early 1990s.
The agreement includes a payment of $9 million in cash to Conseco, a Carmel, Ind.-based insurance company.
The settlement is designed to fully compensate Conseco for the stock and cash that its Statesman Savings Holding Corp. unit invested when it took over three troubled Iowa thrifts in 1988, Justice Department lawyer David Cohen said. A federal accounting rule change wiped out part of the thrifts’ capital, contributing to their failure.
The settlement could buoy hopes of other investor groups for a large payout of their claims against the government for a rule that wiped out their paper assets known as supervisory goodwill. The United States faces about 120 lawsuits in the U.S. Court of Federal Claims in Washington seeking as much as $30 billion in damages.
“This is small in dollar terms, but it’s important because cash is actually going to change hands,” said Caren Mayer, an analyst with NationsBanc Montgomery Securities.
