Lincoln Parent Adds Edwin Gray to Suit Against Regulators

The former parent of Lincoln Savings & Loan on Thursday added its one-time nemesis, Edwin J. Gray, as a defendant in its pending lawsuit against current and former federal regulators. The suit claims that the regulators leaked confidential, inaccurate and misleading information to the public.

American Continental Corp. in Phoenix contends that its Irvine-based thrift was damaged by the leaks and seeks $200 million in compensation in U.S. District Court in Phoenix.

The company claims that Gray, former chairman of the defunct Federal Home Loan Bank Board, leaked damaging information “in retaliation” for the company’s active objections to Gray’s re-regulation of the thrift industry.

The company said in a prepared statement that its accusations against Gray are based in part on House Banking Committee testimony by Rosemary Stewart, the top federal thrift enforcement regulator.

Stewart characterized the bank board’s attitude about Lincoln as a “vendetta” and said Gray and another agency official wanted to hold out Lincoln as an example of “the evil” that results from investment excesses, “even to the point of punishing Lincoln for its vocal objections” to restrictive regulations.

Gray, now president of a Miami thrift, left his regulatory post at the end of June, 1987. He was on vacation and could not be reached for comment late Thursday.

Regulators seized Lincoln on April 14, a day after American Continental filed for bankruptcy protection. The S&L;’s collapse is expected to be the single costliest thrift failure ever, with taxpayers paying up to $2 billion to bail it out.