The former banking executive chosen this week as the top administrator in Calvert County was accused by federal regulators in the 1990s of contributing to the collapse of an Annapolis savings and loan and, in effect, agreed not to work for banks in the future.
At least one county commissioner said she was unaware of that background when the commissioners met in a closed-door session Tuesday to appoint Douglas A. Parran Jr. as interim county administrator from next month until at least December 2006.
In an interview, Parran denied any wrongdoing during his tenure as president of First Annapolis Savings Bank and blamed its collapse on the federal government's decision to alter the regulations and contracts that governed savings and loans.
"They changed the rules," said Parran, 60, of Lusby. "There was no way you could continue the operation without them honoring the contract they had entered into."
Commissioner Susan Shaw (R-Huntingtown) said she was outraged that Parran did not inform the board about the controversy over the savings and loan's collapse. She said the matter came to her attention later in the week only when someone raised concerns about Parran's background.
Some commissioners were aware of Parran's involvement and said they did not consider it relevant when choosing him for the new job.
They praised his performance for the past decade as director of general services, the county's largest department, and noted that he fills in frequently when the current administrator is on vacation.
"I think he's demonstrated that he can do the job and do it with integrity," said Commissioner Wilson H. Parran (D-At Large), who is not related to Douglas Parran.
Parran worked in the 1980s as senior manager and director of First Federal Savings & Loan Association of Annapolis. He became president of the bank in 1988 when it was converted to a stock-based institution and renamed First Annapolis Savings.
But he said it was impossible for the bank to survive after Congress passed a law in 1989 -- the Financial Institutions Reform, Recovery and Enforcement Act -- that changed the rules governing savings and loans.
In March 1990, Parran resigned from the bank, which was taken over by federal authorities a few months later.
The U.S. Office of Thrift Supervision alleged in a 1993 civil consent agreement with Parran that he "participated in unsafe or unsound practices" in conducting the business of First Annapolis and cost the bank more than $3.3 million by violating a previous agreement the bank had with regulators.
As part of that settlement, Parran agreed to pay $10,000 and not "participate in any manner" in the affairs of federally insured banking institutions without special permission from regulators.
Parran, who left his job as vice president of Maryland Bank and Trust while the agreement was finalized, said he accepted the settlement to save money and put the matter behind him.
Parran, who denies the office's allegations against him, said, "It would cost many, many more dollars than I ever had to try to" fight the Office of Thrift Supervision. "You cannot win a suit against the federal government because they just break you."
The Resolution Trust Corp., a federal agency that oversaw the bailout of failed savings and loans, accused Parran and other bank officials of "unsafe, unsound and reckless lending policies and practices" that cost the bank more than $20 million, according to a 1993 civil lawsuit filed in an attempt to recover the money.
In 1996, a federal judge ruled in Parran's favor in the lawsuit against him and seven other bank officials. According to an account in the Daily Record, U.S. District Court Judge J. Frederick Motz cited "a glaring gap in the RTC's proof."
The newspaper quoted Motz as writing, "At the least a defendant officer or director facing multimillion-dollar liability is entitled to be confronted with competent evidence that in fact a misjudgment was made."
Staff researchers Bobbye Pratt and Richard Drezen contributed to this report.