J&am a
By Jeff Goodwin
The Legislature's Special Commonwealth Com
mittee concluded two dap of hearing Wednesday
afternoon with former state Banking Director Paul
Amen defending hb role In the affair.
Amen, who aid he had been looking forward to
the chance to tell hb story for five months, said that
a number of factors, including the overall state of
the economy, contributed to the failure of Com
monwealth Saving3 Co.
He also said he and hb department had attemp
ted a number of actions to keep Commonwealth
from going under.
One action he took was attempting to get S. E.
Copple, the president of Commonwealth, to pump
hb own assets into Commonwealth to provide the
institution with fresh capital.
Amen said he also tried to find a buyer to take
over Commonwealth and was in fact attempting to
put a deal together with investors the day before the
institution was closed.
He said an Associated Press story that ran in area
papers on the morning of Nov. 1 caused a run on the
institution and effectively ended any hope of finding
a buyer.
Amen also rebutted criticisms that he should
have taken action sooner to keep Commonwealth
from going under.
He said an earlier takeover of Commonwealth
would have created a run on similiar institutions
around the state.
He also said removing Copple from hb position as
president of Commonwealth would have shaken
depositors faith in the institution.
MS. E. Copple was a man of great reputation in the
city of Lincoln," Amen said. To most people who
were familiar with the institution he wa3 Common
wealth." Amen refused to shoulder any of the blame for
Commonwealth's collapse.
"I have not come up with a single action that we
took or did not take that could have changed the
situation," he said.
Tuesday the committee heard testimony from
Gov. Bob Kerrey, former governors Charles Thone
and J. James Exon, and William Riley, state banking
director under Exon.
Riley said Commonwealth was not a major con
cern during his term as banking director but he did
admit that, given the financial instability of the
institution, it was a mistake for the Nebraska Depos
itory Institutions Guaranty Corp. to admit Com
monwealth as a member.
Kerrey testified that he first learned of the serious
ness of the Commonwealth situation Oct. 25 at a
meeting with Amen.
The impression up until Oct. 25 was still that S. E.
Copple was going to save the day," Kerrey said.
He said the possibility of finding a buyer for Com
monwealth was discussed at the Oct. 25 meeting. He
said it was the feeling at the time that there was
about a 10 percent chance of finding a buyer.
Kerrey said he believes the state does have a liabil
ity to the Commonwealth depositors.
"My basis for that b that we have made some
mbtakes," Kerrey said. "We did not properly regu
late it. Thb private corporation (the NDIGC) that
we permitted to be created was honoring the law
and advertising that accounts were covered up to $30,000
even though they knew they didn't have the money
to back it up."
Charles Mitchell, deputy director of the state
Banking Department, also testified before the com
mittee. Mitchell, while saying that he did not think an
earlier closing of Commonwealth was justified, did
say that Commonwealth probably could have been
closed on the basis of the March 31, 1982, examina
tion of the institution.
"I think they could have justified that decision," he
said. "The examination report did indicate there
were outstanding losses existing."
Claims boartfTrules depositors entitled to money back
By Jeff Gscdwla
The state Claims Board
ruled Thursday
morning that Common
wealth Savings .Co. dep
ositors are entitled to com
pensation from the state.
The ruling, however, ap
plies to the depositors
tort claim. The board said
it has not yet reached a
decbion about the con
tract claim made by the
depositors.
The board rejected con
tentions made by the
state's attorneys that the
duties of the banking de
partment under the sta
tutes which set up the
Nebraska Depository In
stitution Guaranty Corp.,
were dbcretionary and
not mandatory.
The board's decision al
so stated that "the depart
ment committed a 'negli
gent or wrongful' act in
permitting Commonwealth
Savings Co. to gain en
trance into the corpora
tion at a time when the
department knew, or by
the exercbe of reasona
ble care should have
known, that Common
wealth was not in a posi
tion of financial strength
and that its failure would
serve to emasculate the
NDIGC."
The board also rejected
the state's claim that the
act of Commonwealth's
insolvency occured in
1930 and, as a result, the
two-year Statute of Lim
itations began at that time
and had run out by the
time Commonwealth act
ually went under.
The board stated, To
argue that the cause of
action occured before Nov
ember 1, 1933, b simply
not logical. The deposi
tors had no knowledge of
any injury or cause of
action before the institu
tion was closed. Their
claim did not accrue until
November 1, 1983, and,
accordingly, the Statute
of Limitations could not
have begun to run until
that time."
Under the board's pro
posal a compromise agree
ment would be reached
under which the deposi
tors would receive $33
million.
The agreement must
now be approved by the
Lancaster County District
Court.
It would then be refer
red to the Legbiature,
which has the final say in
allocating any compensat
ion to the depositors.
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Friday, June 1, 1934
Daily Nebraskan
Page 3
