Stephen Trafton

In July 1990, during the Savings and Loan crisis, Stephen Trafton was hired by the nation's fifth largest S&L, Glendale Federal Bank, to devise a plan to save it from seizure by federal bank regulators. In March 1992, he was named Chairman, CEO and President of the bank and its holding company, Glenfed. Trafton then instigated and led one of the largest private (non government assisted) recapitalization and restructurings of a troubled financial institution in U.S. history. This action was credited with saving American taxpayers $4 - $5 billion, if it had been seized and liquidated by the federal Resolution Trust Corporation (RTC).

During his tenure, Trafton also oversaw a major breach-of-contract lawsuit against the Federal Government involving the passage and implementation of certain provisions of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). Despite the government's arguments to the contrary, including the assertion that Trafton and Glendale were simply trying to defraud the Federal Government, the United States Supreme Court sided with Glendale. The court affirmed the principle that the U.S. Government cannot breach contracts with impunity. As a result, Glendale was initially awarded $908.9 million by the Court of Federal Claims. This was one of the largest ever judgments against the U.S.Government and helped to label Trafton as a turnaround specialist. Trafton's successful court-case against the Federal Government was profiled in the Los Angeles Business Journal, Fortune Magazine, Business Week, The American Banker, Forbes, The Los Angeles Times, The New York Times, and The Seattle Times.