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President of failed Western Savings is fined


PHOENIX – Another chapter in the long-running savings and loan association drama has ended with a fine and probation for the president of Western Savings, Gary Driggs.

Driggs was fined $10,000 yesterday and was placed on probation for five years. His sentence begins with 30 days of house arrest.

Driggs pleaded guilty to a pair of felony charges in July. One was for signing an annual report in 1987 that didn’t disclose certain bond problems. The other was for signing a 1988 letter to regulators that falsely stated Western Savings had properly researched loans that failed later.

In exchange for his guilty plea, the U.S. Attorney’s Office dropped the rest of the original 25-count indictment.

Federal regulators took over Western Savings in 1989. Its collapse is expected to cost taxpayers $2.3 billion, making it the third-largest behind Arizona’s Lincoln Savings, at $2.9 billion, and $2.4 billion for University Savings of Houston.

Western Savings’ $3.5 billion in deposits and its 62 branches were purchased by BankAmerica Corp. in May 1990 for $81.2 million.

U.S. District Judge Paul Rosenblatt said he agreed with supporters and defense attorneys that the false statements prolonged but did not cause Western Savings’ collapse. He said a poor economy, unfavorable tax laws and aggressive regulators were as much to blame as Driggs’ bad decisions.

Driggs, whose grandfather founded Western Savings, acknowledged and apologized for actions that masked the institution’s precarious financial condition during the 1980s.

“I am relieved it is all over,’ Driggs said afterward.

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