October 18, 2002

                                                               Media: Josh Reiss
                                                                  (713) 267-3740
                                                            Investors: Ron Kurtz
                                                                  (713) 267-3686



                     MAXXAM INC. VINDICATED BY SETTLEMENT OF
               OFFICE OF THRIFT SUPERVISION ADMINISTRATIVE ACTION

                  Company to Pursue Counterclaim and Sanctions
                Against the Federal Deposit Insurance Corporation


         HOUSTON (October 18, 2002) - MAXXAM Inc. and its Chairman and CEO
Charles Hurwitz have reached a settlement with the Office of Thrift Supervision
(OTS), concluding a six-year administrative action regarding United Savings
Association of Texas (USAT), a savings and loan that went into receivership in
December 1988 during the S&L crisis that bankrupted most Texas thrifts.

         The settlement allows the company to achieve three important
objectives. First, it brings the OTS action to closure on very favorable terms
and ends further financial expenditures on the matter. Second, it should bring
an end to the Federal Deposit Insurance Corporation's (FDIC) claim against Mr.
Hurwitz, a claim that the FDIC made contingent upon the OTS prevailing in its
action. Third, it allows the company to intensify legal actions it has filed
against the FDIC in federal court for violating federal appropriations laws and
pursuing politically motivated litigation.

         The settlement follows a landmark Recommended Decision by
Administrative Law Judge Arthur Shipe (issued on September 12, 2001) that the
OTS should dismiss all of its charges against MAXXAM and Mr. Hurwitz. The trial
before Judge Shipe was the longest and most expensive in the history of the OTS,
including 110 days of trial spread out over more than two years.

         It also occurs fifteen months after a U.S. House of Representatives
Task Force Report detailed numerous contacts by the FDIC and OTS -- many
conducted prior to the filing of their respective lawsuits -- with the Interior
Department, White House Council on Environmental Quality, members of Congress,
the Office of Management and Budget, and certain environmental organizations to
develop a strategy that would use the lawsuits as leverage in order to force a
so-called "debt for nature swap." This swap would have forced MAXXAM to trade
valuable timberlands owned by a company subsidiary to the federal government in
exchange for relief from the agencies' litigation.

         Commenting on the settlement, MAXXAM Vice Chairman and General Counsel
J. Kent Friedman said, "This represents the vindication of MAXXAM and Mr.
Hurwitz that we have for years said should be the final outcome of the OTS
matter."

         In its motion for sanctions and counterclaim pending against the FDIC
in federal court in Houston, the company alleges that the FDIC, having concluded
that its own claims were inherently weak, improperly used its own funds to
finance the OTS administrative proceeding over the same set of facts presented
by the FDIC in its litigation.

         Mr. Friedman added that resolution of MAXXAM's counterclaim and motion
for sanctions that have been pending before U.S. District Court Judge Lynn
Hughes for several years has likely been delayed due to a statute that prohibits
a federal judge from taking any action that might affect an OTS administrative
proceeding.

         "Our day to be heard by Judge Hughes has arrived. We intend to
vigorously pursue our claims and demonstrate to the court that the FDIC broke
federal appropriations laws, pursued politically motivated litigation, and
should be sanctioned for its conduct," Friedman said.



                                   160-101802


Company press releases may contain statements that constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The company cautions that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may vary materially from those expressed
or implied in the forward-looking statements as a result of various factors.




                         HIGHLIGHTS OF SETTLEMENT TERMS

o        MAXXAM and Mr. Hurwitz make no admission of wrongdoing.
o        MAXXAM agrees that it will not pursue legal action against the OTS or
         its employees as part of its counterclaim against the FDIC.
o        The OTS agrees to drop its administrative action and will not pursue
         any further legal actions against the respondents with regard to this
         matter.
o        Of the approximately $821 million sought by the OTS, the respondents
         will pay the OTS $206,000. The OTS spent in excess of $4 million
         pursuing its claim. Thus the settlement represents approximately three
         hundredths of one percent of the amount sought by the OTS in its
         administrative action.
o        The respondents have voluntarily undertaken to accept for three years
         certain restrictions with respect to insured financial institutions
         (including not becoming a controlling shareholder or otherwise serving
         as an institution-affiliated party). MAXXAM does not believe that these
         restrictions are meaningful as it has no present or contemplated
         intention to engage in any of these activities.
o        The OTS agrees that the record basis for the administrative action
         includes the Recommended Decision of Administrative Law Judge Arthur
         Shipe. As a result, MAXXAM expects to use the Recommended Decision in
         its counterclaim and motion for sanctions before U.S. District Court
         Judge Lynn Hughes.