Ethics Office Asks for Probe of FHLBB Chief’s Travel Pay

The Office of Government Ethics asked the Justice Department on Thursday to investigate travel expense reimbursements paid to Edwin J. Gray, chairman of the Federal Home Loan Bank Board, and to other board members by the financial industry associations they regulate.

In addition, Gray and his staff were ordered to stop accepting travel and entertainment expense reimbursement from any individual or group other than the board itself.

The ethics office order followed the bank board’s release Tuesday of more than 60 pounds of travel and entertainment receipts belonging to Gray, executive staff director Shannon Fairbanks and other bank board directors and staff members.

David Martin, director of the Office of Government Ethics, an independent agency, on Thursday also asked the bank board’s inspector general to investigate and analyze the documents, copies of which were released to The Times and several other newspapers under provisions of the Freedom of Information Act.

In a separate development, described by bank board officials as coincidental, Gray issued a one-page memo Thursday morning saying that bank board employees are now prohibited from accepting payment of their travel or entertainment expenses by the 12 district federal home loan banks, by thrift industry trade associations or by any savings institutions regulated by the bank board.

The investigation of Gray’s and other bank board members’ expenses could take months to complete, according to one federal investigator.

Discrepancies in some travel records have been found, the investigator said. “Their procedures were sloppy and dreadful, and a lot of people might have to pay back some money,” he added.

Gray, a former senior vice president of Great American First Savings Bank in San Diego and a former aide to President Reagan, has already paid back nearly $27,000 in reimbursed travel and entertainment expenses.

On Thursday, Gray said in a telephone interview from Washington that he would “welcome” the investigation “because I would like the air cleared.”

Through his attorney, Gray has acknowledged that he made mistakes by accepting reimbursement of expenses from the district banks and from industry trade groups. “But you have to remember,” he said in the interview, “that (these) practices have existed for years.”

Gray has long been under fire by industry executives, who oppose his philosophy of stricter regulation. Speculation that he was about to either quit or be fired has been widespread for more than a year.

Gray’s detractors have focused their attention as much on his travel expenditures as on his regulatory theories. On Thursday, Gray repeated his claim that his critics simply do not want a “tough” regulator.

“We ought to be judged on the basis of service to the public and not on how popular we are with members of the thrift industry,” he said. “Over the years, the industry has felt that the regulators are the property of the industry . . . (and) that is a totally erroneous measurement of the work of a regulator.”

The Office of Government Ethics requested the Justice Department involvement because at least one industry group, the U.S. League of Savings Institutions, has refused to turn over records of reimbursements to Gray and others for expenses incurred at a league meeting last April.

The Justice Department has the power to subpoena those records; the Office of Government Ethics does not.

Not ‘Appropriate Request’

“We wouldn’t turn over the documents because it wasn’t an appropriate request,” league spokesman Mark Clark said. “And since they didn’t have any power to enforce it, we declined.” The league, Clark added, has “acted with complete propriety.”

Earlier this week, Gray’s attorneys disclosed that he had repaid the district banks more than $25,000 for the travel-related expenses of his wife, Monique, and for chartering a private jet in July, 1983.

In October, Gray reimbursed the Federal Home Loan Mortgage Corp. (Freddie Mac) $1,425 for expenses that he incurred during a 1985 trip to Europe. He repaid the agency for tickets to tennis matches at Wimbledon and for two nights’ lodging for his wife and children in Switzerland.