Delores and Julian Atencio never sat on the board of a failed savings and loan, but they know how it feels to bear the brunt of the powerful Resolution Trust Corporation, which was established to dispose of what was left of the nation's plundered thrift industry.

The Atencios' problems started soon after they moved to Phoenix from Colorado in 1989 and opened a checking account at Great American Bank. The bank's Senior Advantage checking account was a good deal for a retired couple on a fixed income: no monthly fee, no minimum balance, free checks and 5.25 percent interest. The couple had their $841 in monthly social security disability checks sent directly to their bank branch at 40th Street and Thunderbird. In August 1990, the bank informed the Atencios that the IRS had put a $1,500 levy on the account; that was the amount Julian owed from his days as owner of an auto-detail shop in Colorado. On a form he had sent to the IRS the previous April, Julian Atencio had proposed to pay that debt in $5 monthly installments--an incredible, 25-year payment plan. He claimed he never heard back from the IRS before the levy was slapped on the account.

The bank's levy notice, dated August 9, 1990, didn't say what action the IRS would take; the bank officer failed to specify one of several possibilities outlined in the letter. When the Atencios called the bank and found out the IRS was freezing $460 in their account, they realized they were stuck. They had already written several hundred dollars in checks to local businesses.

In all, nine of the Atencios' checks, worth about $450, bounced. The bank paid $130 to cover two checks, but sent the other seven back to the businesses. The bank applied a $10 "nonsufficient funds" charge each time a check came in. Several NSF checks were returned more than once, and the $10 charges piled up.

The Atencios borrowed money from a friend to cover the bad checks they had unwittingly written. But by the end of that August, they owed the bank $348.

"It was hard to get by, let alone catch up," remembers Ed Clevenger, Delores' son from a previous marriage. "And then, all of a sudden, they're out all this money to the IRS and then the bank."
The couple explained their dilemma to the bank, which agreed to give them time to get back on their feet. To be sure, the bank had the Atencios sign a "repayment agreement" stipulating that the couple should make an initial payment of $140, then begin retiring the rest of the debt at $25 per month, starting in July 1991.

The Atencios and bank employees Janice Hedlund and Neri Corral signed that agreement on September 11, 1990. "Hedlund stated that she understood our financial situation," Delores Atencio would later say in a sworn affidavit. "[Hedlund] was aware that the very limited amount of money deposited into our Senior Advantage checking account was from social security."

On October 2, 1990, the Atencios went to the bank to make their first payment, giving the bank the agreed-to $140, as well as an additional $13 to put in their account. The bank, however, applied the entire $153 toward the debt, leaving a balance of $195. Two days after the couple made that first "good-faith payment," the bank scrapped the agreement. The Atencios, who had halted direct deposit, went to the bank to deposit Julian's $547 social security check. When he signed the check over to the bank, Corral--who had earlier signed the repayment agreement--gave him a receipt for $352. When the couple asked what was going on, Corral told them she had taken out the $195 to pay off the remainder of the debt.

When the couple produced a copy of the repayment agreement, they said, the bank balked. "Neri Corral told Julian and me that the bank did not have to honor the repayment agreement, but we did," Delores claimed.

The Atencios were furious. While the money in dispute was only a few hundred dollars, its loss was devastating to them.

"Bills started stacking up. Stuff wasn't getting paid," remembers grandson Jim Clevenger, now 20. "It took that one month to get behind and took forever to get back up." At the time, Clevenger and his brother and sister were living with his grandparents while his parents were going through a divorce.

The Atencios collected and sold aluminum cans to earn gas money to take their granddaughter to school. They began getting food from food banks. Three months behind on rent, they were forced to move out of the house they were renting.

That December, Julian was hospitalized for a heart condition, hypertension and depression. "It was really hard on my grandfather doing all that running around," Jim Clevenger says. The Atencios complained to Great American officials in Tucson and at the bank's headquarters in San Diego. "We live from one paycheck to the next, trying to support three grandchildren on $841 per month," Julian Atencio wrote to one bank official. ". . . [The bank] left us penniless."

The bank's vice president, Eric Hager, later responded by accusing Julian Atencio of committing "anticipatory breach of contract" in a conversation with Corral. "Mr. Atencio unequivocally stated that he would refuse to . . . make any further payments under the repayment agreement, because the balance due represented NSF fees, which Mr. Atencio felt were unjust," Hager wrote. "Therefore, the branch employees were legally justified in setting off the amounts deposited with the social security check."

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