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Debt-for-Nature Exchange Still Best Option for Headwaters Acquisition Funding
Posted
2/24/98 A Debt-for-Nature exchange remains the best solution for acquiring Headwaters Forest– a fact easily lost in the current din surrounding State of California acquisition funding. Headwaters is a 60,000-acre tract in Humboldt County. It constitutes the largest remaining parcel of ancient redwoods, and their buffer lands, outside of parks. Recently environmental activists thwarted an attempt by Gov. Pete Wilson to force a vote on $130 million to acquire Headwaters. Wilson had sought the vote in a state ballot measure slated for June without first requiring an adequate Habitat Conservation Plan to protect the Forest's wildlife and ancient redwoods. |
Ancient redwoods outside Pacific Lumber's Carlotta Mill by Djuna Ivereigh. |
Debate now centers on Wilson's subsequent attempt to pressure lawmakers for a direct appropriation of the $130 million, still lacking a sufficient habitat plan. What is Debt-for-Nature? A Debt-for-Nature exchange is a transfer arranged between the federal government and MAXXAM Corp., parent company of Pacific Lumber Co., which owns Headwaters. Under the exchange, U.S. taxpayers would gain permanent protection for Headwaters– as a public forest preserve– as partial repayment of the $1.6 billion federal bailout of a failed S&L. The United Savings Association of Texas (USAT) went bankrupt in 1988 due to its unlawful destabilization by MAXXAM CEO Charles Hurwitz and other USAT trustees, according to federal prosecutors. Pending litigation Two federal regulatory agencies have filed suit against the former USAT executives. The Office of Thrift Supervision (OTS) on Dec. 23, 1995, filed a Notice of Charges accusing MAXXAM, Hurwitz and five other USAT board members of "unsafe and unsound practices" that led to the failure of USAT. The 13 claims filed allege the respondents violated federal regulations requiring them to maintain USAT's capital requirements at or above a certain minimum level. The OTS is seeking an unspecified amount of restitution and $839,000 in civil penalties. Total damages could exceed $1 billion. Currently the case is on hold until June in the Houston administrative court due to scheduling conflicts on the part of the attorneys. The Federal Deposit Insurance Corporation (FDIC) on Aug. 2, 1995, filed a civil action against Hurwitz in the U.S. District Court for the Southern District of Texas. The FDIC in its original complaint sought damages in excess of $250 million based on the allegation that Hurwitz– the controlling shareholder, de facto senior officer and director of USAT– was involved in certain decisions which contributed to the insolvency of USAT. The complaint further asserts that Hurwitz was obligated to ensure that the net worth of USAT was maintained. The court has since joined the OTS matter to the FDIC action. The FDIC suit has been delayed until a ruling on the OTS matter is issued. The FDIC on Jan. 15, 1997, filed an amended complaint that seeks, pending the OTS prevailing in its action, unspecified damages from Hurwitz. The amount of the damages sought would be set in accordance with any amounts the OTS does not collect from the respondents. Both
agencies have stated a willingness to consider a Debt-for-Nature
exchange in settlement of all or part of their claims. What you can do: Contact Acting Chairman Hove at the FDIC and Director Seidman at the OTS. Urge them to advocate a Debt-for-Nature plan to reclaim the value of our lost tax dollars. Andrew
C. Hove, Jr. Ellen
Seidman Tell President Bill Clinton to take any necessary action to protect all 60,000 acres of the Headwaters Forest until the OTS and FDIC suits are decided. Remind him that a Debt-for-Nature exchange is the preferred means of acquiring the last threatened remnant of the ancient redwood forest ecosystem. President
Bill Clinton
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FORESTS FOREVER San
Francisco |