Gray Claims Probe Into His Expenses Is Intimidation

Controversial Federal Home Loan Bank Board Chairman Edwin J. Gray, under investigation by a federal ethics agency for his travel and entertainment expenses, said Wednesday that he is being attacked by “disgruntled” savings and loan industry executives who “don’t like a tough regulator.”

Gray, in a telephone interview, said the questioning of his bank board-related expenses is an attempt by his detractors to “intimidate a federal regulator.”

The issue of Gray’s travel and entertainment expenses undoubtedly will heat up in the next two weeks because the 12 district Federal Home Loan banks are scheduled to turn over their expense payment records concerning Gray to the Federal Home Loan Bank Board (FHLBB) in Washington.

When that happens, the board will release the documents to the press, according to Harry Quillian, FHLBB general counsel.

The records will show excessive travel and entertainment charged to the government, claim Gray’s critics, none of whom will speak for attribution.

Expenses of FHLBB members and staff are typically paid, at least partly, by the Federal Home Loan Banks in the districts in which they are incurred, according to bank board officials.

Turning over the records, which have been requested by several news organizations under the Freedom of Information Act, will signal an attempt by the district banks to “distance themselves” from the controversial Gray, according to several savings and loan industry sources.

Until now, the district banks have generally refused to turn over documents under the Freedom of Information Act, arguing that because they are only quasi-governmental agencies, they are exempt from the act’s requirements.

Last month, however, the 12 district bank board presidents, on advice of counsel, agreed to disclose expense account information on Gray and other bank board staffers and members, according to Harry McPherson, the attorney for the district banks.

The decision, according to an attorney familiar with the action, was made “in the spirit of accommodation” with the FHLBB in Washington.

Gray denied Wednesday that the district presidents’ decision to turn over his expense records to the bank board in Washington indicated any great weakening of support. “I don’t think they’re distancing themselves,” he said. “It was merely a legal matter.”

The district banks are now collecting the expense account information on Gray, former bank board members and bank board Executive Staff Director Shannon Fairbanks and will turn over the documents in the next two weeks, McPherson said.

Gray is under investigation by the Office of Government Ethics for his travel and entertainment expenses reimbursed by the U.S. League of Savings Institutions earlier this year.

In addition, the office’s director, David H. Martin, said he recently asked the inspector general of the bank board to also investigate those expenses.

Two weeks ago, Gray reimbursed the Federal Home Loan Mortgage Corp. (Freddie Mac) $1,425 for expenses that he incurred during a 1985 trip to introduce Freddie Mac securities to European capital markets. Gray paid back the agency for tickets to tennis matches at Wimbledon and for two nights’ lodging for his wife and children in Switzerland.

Some Expenses Repaid

Documents released by Freddie Mac show that the government-chartered corporation had also paid bank board staff and members’ expenses for such items as greens fees at Pebble Beach and chauffeured sightseeing limousines in London. Some of these expenses were paid back to the agency.

Gray on Wednesday defended his travel and said that his trips abroad have resulted in debt financings that have saved the Federal Home Loan Bank system $85 million. About 25% of this year’s $14 billion in new financing by the system will be secured from overseas markets, compared to 2.5% last year and 1.4% in 1984, he said.

Gray, a former senior vice president of Great American First Savings Bank and a former aide to President Reagan, has long been under fire from some S&L; executives because he favors stricter industry regulations.

Speculation that Gray would resign his post has surfaced regularly for more than a year, following reports that White House Chief of Staff Donald T. Regan wanted Gray ousted. Gray said Wednesday that he intends to serve out his full term, which expires next June 30.

Gray has been the only remaining member of the bank board since the resignation last month of Donald Hovde and the August resignation of Mary Grigsby. Because there is no quorum, the bank board has recently been powerless to take any action against failing thrifts. The Reagan Administration has already made its choice for the two bank board vacancies, industry sources say--New York University economics professor Lawrence J. White and Atlanta attorney and businessman Lee H. Henkel, both of whom tend to favor less regulation.

Because the Democrats will control the Senate during the next session, industry sources said Wednesday that the two nominations may meet with resistance.

Times staff writer Ronald J. Ostrow, in Washington, contributed to this story.