Fed Dragon Strikes Again Dallas, Texas By Mark Jackson American entrepreneurial spirit was delt another blow Monday when Washington, D.C. federal claims judge Robert H. Hodges Jr. issued a devastating decision in Landmark Land Co. Inc. vs. United States ("Landmark") that will rob hundreds of investors of more than $50 billion. Allowing a judge to make the decision instead of the Constitutionally-prescribed jury, the plaintiffs opened the door to the proverbial hen house and gave a spare set of keys to the fox. As probably the most visible of all the "Winstar" lawsuits brought by former Savings & Loan industry owners, the Landmark case creates a bleak outlook for the 100+ pending lawsuits in which thrifts and investors allege the Fed breached contracts it entered into in the 1980s. Bolstering the Winstar cases is the 1996 decision by the Supreme Court which stated that the government did breach its contracts with financial institutions when it enacted the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Among other restrictions, FIRREA imposed unattainable net worth requirements on thrifts, while imposing no such limits on Federal Reserve banks. At the center of the allegations is the Federal Savings and Loan Insurance Corporation (FSLIC), a privately-held company which, working under guise as an arm of the Federal government, confiscated S&L properties, sold them for profit, then charged billions of dollars in fees to the U.S. taxpayer via its government contract. The FSLIC, itself, then acheived "insolvency" status in 1992 and was thereby able to obtain billions of additional dollars in government loans, which have yet to be paid back. The breach with Landmark arose from a 1982 contract in which Landmark,a real estate development company specializing in golf courses, residential and resort development, put up cash and real property totaling approximately $21 million in order to purchase from the FSLIC two failing thrifts: Dixie Federal Savings and Loan and Loan Association, and Heritage Federal Savings and Loan Association, which were merged under the name of Dixie. Per the agreement, Landmark, like other thrift investors, was to receive favorable accounting treatment for capital and other properties. Relying upon the FDIC to honor the contract, Landmark then transferred to Dixie, in 1983, all of its remaining assets, which were held in its subsidiary. In 1986, Dixie increased its investment by transferring real estate and other assets to acquire St. Bernard Federal Savings and Loan Association. The assets of both Dixie and St. Bernard were then rolled into Oak Tree Savings Bank, which was forced to close its doors in 1992. Monday's outcome stands in stark contrast to a 1999 Winstar decision which awarded $909 million to Glendale Federal Bank of California. That decision gave hope to the investors, as well as many U.S citizens, that perhaps the FSLIC may finally be forced to return the estimated $480 billion it bilked from tax payors and investors in the 1980s. However, with judge Hodges' decision, Landmark was only allowed to recover $21 million of the $750 million in damages, that $21 million representing only the cash and real estate Landmark put forth in order to acquire Dixie. Furthermore, the judge awarded $17.7 million to the Federal Deposit Insurance Corporation, another private company affiliated with the Federal Reserve Bank, for money contributed to St Bernard in 1986 to keep the thrift from failing. Thus, the Fed came out the winner by a multi-billion dollar landslide, while investors and tax payors got soaked.