October 01, 2006
Bank Seeks Cert in Contract Case
A fourteen-year-old breach of contract case against the federal government may go yet another round, if the U.S. Supreme Court decides to grant cert. True, cert is about as likely in a contract case as Elvis still being alive, but the directors of Rhode Island’s late Old Stone Bank will give it a shot, after the Federal Circuit slashed their contract verdict against the government by $112 million.
Back in 1984-85, the feds apparently encouraged Old Stone to take over a pair of ailing saving and loans, promising that Old Stone in return could use some creative accounting to keep its balance sheet from going south. After Old Stone took over the institutions, the government disallowed the accounting treating, leading to Old South’s ultimate decline. The Court of Federal Claims hit the government with a $192.5 million judgment, which the Federal Circuit reduced to $74.5 million.
The Old Stone Bank building (the dome is visible against the skyline, top left) was sold to Brown University by the Resolution Trust Corporation, and will now be a museum.
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