FHLBB Chief Apologizes for ‘Flawed Judgments’

Federal Home Loan Bank Board Chairman Edwin J. Gray apologized Monday for using “flawed judgments” in determining which of his travel expenses were business-related and subject to reimbursement by the bank board’s regional banks.

“I deeply regret the insensitivity to travel-related matters which I am now in the process of correcting,” Gray wrote in a letter to Sen. Jake Garn (R-Utah), chairman of the Senate Committee on Banking, Housing and Urban Affairs.

The letter “is to apologize to you (Garn) for my own flawed judgments,” wrote Gray, who last week said he had returned more than $11,000 in expense money received as reimbursement for travel expenses generated by his wife.

Travel expenses of FHLBB members and their staffs have typically been paid, at least partly, by the 12 regional Federal Home Loan Banks in the districts in which they are incurred.

In the letter, Gray described a Dec. 4 order in which he directed that bank board employees “halt longstanding practices, irrespective of their prior regulatory basis, relating to bank travel.” The order requires employees to “perform all official travel” in accordance with applicable federal regulations.

Gray, who is under investigation by the Office of Government Ethics for his travel and entertainment expenses, said personal finances played an important role in his determination of what expenses were reimbursable.

“I have gone into debt, personally, in the amount of some $75,000 thus far in this job,” wrote Gray, who subsequently outlined some of the expenses generated by a need to support homes in California and Washington.

“I suppose I thought that the cost of hotel rooms, food, etc. associated with official travel was infinitesimal . . . (compared to the) well-being” generated by the disputed travel costs.

“In retrospect I can only say that I should have paid significantly greater attention to such matters,” he wrote.

Gray defended his expense filings as “virtually identical to the longstanding practices of previous bank boards,” but described himself as “responsible, of course, for what has occurred during my tenure.

Gray, a former senior vice president of Great American First Savings Bank in San Diego and a former aide to President Reagan, has vowed, despite rumors that he will resign or be replaced, to remain as FHLBB chairman until his term ends in June.