In 1989, members of Congress who were supporting an amendment to the proposed Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA") wore this pin while lobbying their colleagues. Their amendment, sponsored by U.S. Rep. Henry Hyde (R-IL), would have reaffirmed contracts the government had made in the early 1980s with over 100 banks and thrifts pursuant to which the financial institutions agreed to assume the responsibility to pay over $20 billion in debt which otherwise would have become the government's responsibility. However, after the U.S. Department of Justice (DOJ) issued a legal opinion to Congress advising that the banks and thrifts had never had valid contracts in the first place, the Hyde Amendment was defeated. Seven years later, the U.S. Supreme Court, in a lopsided 7-2 vote, found in favor of the thrifts, ruling that DOJ's legal opinion was incorrect and that FIRREA breached the thrifts' contracts. Despite the high court's eight-year-old ruling, the U.S. government -- which has had the use of $20 billion of other people's money for almost 25 years now, has yet to pay any meaningful compensation for its wrongful conduct.
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Meritor's primary subsidiary, the Philadelphia Savings Fund Society ("PSFS"), was the nation's first savings bank, a venerable Philadelphia institution which had instilled into six generations of Philadelphia school children the virtues of economy, thrift and savings since being founded in 1816 during the presidency of James Madison. During the early 1980's, however, it was also one of a number of healthy financial institutions which responded to a call for assistance from our government when hundreds of savings institutions were in danger of collapsing. But well after PSFS and the other banks agreed to help the regulators in their time of need, the government changed the rules and refused to keep its end of the bargain. As a result, Meritor and PSFS were seized by federal and state regulators on December 11, 1992 and put out of business after 176 consecutive years of exemplary service to the working-class families of Philadelphia. The Federal Deposit Insurance Corporation, which orchestrated and engineered the seizure because, in part, of its own financial problems, immediately took control of the bank's $3.5 billion in assets and nearly $400 million in shareholder equity and reserves as "Receiver" of Meritor's estate.
In stark contrast with its 60-year history of consistently losing money when liquidating banks it closes down, the administration of Meritor's estate has been quite lucrative for the FDIC. In addition to paying off all of the bank's creditors in full (with up to seven years worth of accrued interest), the FDIC paid itself $127.4 million in administrative fees and expenses as of May, 2000. In the meantime, Meritor shareholders have yet to see a penny. At August 1, 2000, the only meaningful asset left in the estate -- which, since all creditors have been paid in full, could be worth hundreds of millions (or more) to the shareholders -- is a contingent asset which the FDIC has not only failed to protect (despite its fiduciary responsibility to the shareholders); but has instead worked actively to destroy. The asset in question is a lawsuit for breach of contract brought against the government (captioned Frank P. Slattery, et al., v. the United States) by a former member of the bank's board of directors after the FDIC -- whose responsibility it was, as Receiver, to bring the action itself -- refused to do so.
The purpose of the Association is to foster communications among, and make pertinent court documents available to, our fellow shareholders; to encourage and support the litigation efforts so as to obtain just compensation for the unlawful seizure of PSFS, and to restore the Philadelphia Savings Fund Society to its historic role as the pre-eminent provider of banking services to the working-class households of Philadelphia.
This web site is maintained by the Meritor/PSFS Shareholders Association, Inc., which is solely responsible for its content. Although the information contained herein came from sources believed to be reliable and accurate (including media publications; analysts' reports; court documents; legal publications; government records and SEC filings), we expressly do not guarantee the accuracy or adequacy of this information or any statements of fact contained herein and any such information or statements may be incomplete or condensed and may be augmented, added to, or deleted without notice. As membership in the Association is limited to Meritor stockholders, it should be assumed that officers, directors and members of the Association, as well as their affiliates, have positions in Meritor stock and may, from time to time, purchase or sell Meritor shares in open market or private transactions. Nonetheless, nothing contained herein should be construed as a recommendation to purchase or sell Meritor securities or securities in any of the other 120 institutions which have similar lawsuits pending against the United States.
Copyright 2000 by Meritor/PSFS Shareholders Association, Inc. All rights reserved.