ABSTRACT
The federal bailout of Lincoln Savings & Loan (LS&L) cost US taxpayers approximately $2.5 billion. The brothers specialized in corporate law and began performing services for Carl Lindner’s American Financial Corporation. The holding company owned banks, savings and loans, insurance companies, and leasing companies. LS&L’s heavy reliance on brokered deposits caused the average interest rate paid on its deposits to be substantially higher than the average rate paid by most other institutions. The majority of the LS&L accounting fraud involved recording improper gains on bogus real estate transactions. The senators met with Federal Home Loan Bank Board (FHLBB) commissioner Ed Gray twice during April and urged him to leave LS&L alone. The FHLBB regulators testified during congressional hearings that Arthur Andersen auditors had helped LS&L personnel create and backdate loan documents. LS&L allegedly issued loans without proper documentation and employed a “SWAT team” to review files and prepare necessary documents prior to the 1986 FHLBB audit.
