Charter S&L; in Settlement With FDIC

Charter Savings and Loan Assn. has reached a settlement with the Federal Deposit Insurance Corp., ending two years of complex and sometimes bitter litigation between the two.

Charter, which was known as Orange Coast S&L; when the litigation began, had been sued for $150 million by the FDIC because several of its directors were major shareholders and directors of Heritage Bank of Anaheim that failed in 1984. The S&L;, in turn, sued the FDIC in a separate suit for its share of assets from loans jointly made with Heritage. The FDIC is the receiver and liquidator for Heritage.

Under terms of the agreement, which still must be approved by the court, the FDIC will receive interests in certain loans and some cash collectively valued at about $560,000. The S&L; will receive an undisclosed sum and be released from the FDIC’s action.

The settlement also clears the way for a major national law firm to continue as counsel for the FDIC in the massive litigation stemming from Heritage’s collapse.

The firm--Finley, Kumble, Wagner, Heine, Underberg, Manley, Meyerson & Casey--had been challenged by the S&L; because of an alleged conflict of interest. The S&L; dropped its objection to the FDIC’s use of Finley, Kumble when the settlement was reached Oct. 24 in Orange County Superior Court.

Arguments about the fairness of the settlement will be heard Dec. 12 by Orange County Superior Court Judge Robert C. Todd.