81 



argued tlrsc that it was not liable because it had not 

 "unmistakably" promised to refrain from regulatory changes on the 

 face of its contracts with the thrifts. The government believed 

 that to hold in favor of the thrifts would essentially exempt the 

 thrifts from the regulatory authority. Second, the government 

 maintained that the regulatory change was merely a public and 

 general "sovereign act" insulating the government from liability. 

 The Supreme Court rejected both these defenses. 



First, the Court held that the "unmistakability 

 doctrine" did not insulate the government from liability. 

 Interpreting the government's contractual obligation to allow the 

 thrifts to consider supervisory good will, essentially did not 

 preclude the government's exercise of authority to modify its 

 regulation. Awarding the thrifts' damages for bz-each would not 

 amount to a limitation on the government's authority to regulate 

 the institutions. The Supreme Court held that to apply the 

 unmistakability doctrine to the thrifts would essentially 

 compromise the government's capacity to make contracts. 



Second, the Court held that the sovereign acts doctrine 

 was not a valid defense. Under the sovereign acts doctrine, so 

 long as the government's legislative or executwe acts are public 

 and general, they cannot be deemed to violate c-;ritracts between 

 the government and private parties. The gov-arrment maintained 

 that the imposition o£ r.iore stringent reouL.t.jry capital 

 requirementa under FI^R^A was a "public and general act" and that 

 the changes could nor b*^ considered a ■.■.each of the government's 



-3- StlM\»wh)c7796 



