U.S. Agency Seeking to Renegotiate Sale of Thrift : S&Ls;: A Texas group bought insolvent American Savings in 1988 with an estimated $2.7 billion in federal assistance. The Administration wants changes in the agreement.

IRVINE â€”  The federal Resolution Trust Corp. said Friday that it will seek to renegotiate the 1988 federally assisted sale of American Savings & Loan to the Robert M. Bass Group, as part of a new initiative of the Bush Administration.

Bass of Fort Worth, Tex., bought insolvent American Savings in late 1988 with an estimated $2.7 billion in federal assistance. The deal was among a flurry of controversial sales of troubled thrifts in 1988 that critics have said amounted to a federal giveaway.

Bolstered by the federal assistance, American Savings has been highly profitable for Bass, led by Texas billionaire Robert Bass. The thrift earned $214.2 million in 1989 and $174.7 million in the first nine months last year.

The American Savings sale is one of about 100 transactions that the Resolution Trust Corp. (RTC), the federal agency charged with overseeing the thrift industry cleanup, will try to renegotiate in the next several months, agency spokesman Steve Katsanos said.

A spokesman for the Bass Group said American Savings is willing to listen to the government’s arguments. However, he could not say how willing the group’s officials will be to make changes in the 2-year-old agreement.

“Whenever they’re ready to sit down and talk about any points, we’re willing to do that,� said Owen Blicksilver, a spokesman for the Bass Group.

The White House on Thursday gave the RTC authority to seek changes in the 1988 sales agreements of failed thrifts. The government hopes to obtain more favorable terms that will lower the cost of the thrift bailout and thus lower the cost to taxpayers.

Most of the government’s effort will be focused on the 96 transactions involved in the so-called Southwest Plan, a strategy used by former regulators to merge 220 failed thrifts, mainly in Texas, into other thrifts, said Katsanos, the RTC spokesman.

Amending various provisions in the transactions could save taxpayers at least $2 billion off the thrift industry’s cleanup cost, estimated at more than $500 billion over 30 years. The RTC, mandated by federal law to review the 1988 deals, hired independent auditors to examine each transaction.

Katsanos said the agency is drawing up a list of priority cases--transactions that it could renegotiate over the next few months. Many of the deals were negotiated in the last few days of 1988, just before certain tax advantages for thrift buyers expired.

In the last days of 1988, the Bass Group provided $350 million and received about $2.7 billion in federal assistance to take over American Savings, then the nation’s largest thrift.

In a unique transaction, American Savings was split into two entities: American Savings Bank, which holds good assets; and New West Federal Savings & Loan, which is essentially a government thrift that holds bad assets.

The American Savings Bank and a real estate management company called American Real Estate Group (AREG) were placed under a holding company called N.A. Capital Holdings Inc. in Irvine. The federal government holds a warrant entitling it to a 30% stake in N.A. Capital.

AREG, meanwhile, was given the contract to manage the bad assets for New West, a self-liquidating thrift. The proceeds of the liquidation, minus expenses, go to the government. AREG already had been formed by the old American Savings to manage its bad assets.

American Savings Bank provided a $7.8-billion note to New West for its capital base, and regulators have been paying interest on the long-term note since then.

A recent audit of the deal lends insight into possible negotiation areas. The RTC auditors recommended that the agency sell its stake in N.A. Capital for $450 million or more; seek to end American’s $112 million in tax benefits, and try to prepay the note as much as possible, saving the government $520 million. The auditors also suggested that the RTC renegotiate AREG’s contract to lower management costs or put the contract out to bid.

The Bass Group may be willing to renegotiate certain provisions, particularly those that would eliminate the government as its partners, Katsanos said.

Blicksilver, the Bass spokesman, acknowledged that American Savings would be more flexible and better able to grow through acquisitions without regulators as part-owners.