Cranston Aids S&L; Whose Chief Raised Funds for Him

A wealthy Arizona Republican businessman received assistance from Sen. Alan Cranston (D-Calif.) for his savings and loan association after he raised more than $40,000 for Cranston’s 1986 campaign and his firm gave $85,000 directly to the California Democratic Party, according to public records.

Cranston, a member of the Senate Banking Committee, was one of five senators who met with federal regulators in April, 1987, to plead for an early conclusion to an investigation of Lincoln Savings & Loan of Irvine, Calif. The case was recently settled through negotiation by officials of the Federal Home Loan Bank Board, ending a three-year inquiry.

Just six months before the meeting involving Cranston, records show, the California Democratic Party received two contributions totaling $85,000 from Lincoln’s parent company, American Continental Corp. of Phoenix.

In addition, Charles H. Keating Jr. of Mesa, Ariz., who is chairman of American Continental, held two fund-raisers for Cranston that netted about $40,000 for his 1986 campaign. Keating and his son, Charles H. Keating III, executive vice president of Continental, contributed at least $3,000 directly to the campaign.

Roy Greenaway, an aide speaking for Cranston, denied that the case involved any conflict of interest. He described Keating as a friend of the senator, who intervened on Keating’s behalf because he believed that Lincoln Savings & Loan was being “overregulated” by federal authorities.

Cranston previously has acknowledged helping the Irvine institution, but the extent of the contributions by Keating and his firm did not come to light until Monday, when the Washington-based Center for Responsive Politics issued a report showing that the Republican and Democratic parties of California received a total of $1.1 million in so-called “soft money” contributions from corporations in the 1985-86 election cycle.

Technically, soft money is given to state and local parties solely for party-building and thus does not have to be reported to the Federal Election Commission.

American Continental’s was the largest contribution to one party in California in 1985-86. Although Keating is a well-known activist in the Republican Party, neither he nor his firms gave any money to the California GOP. The Los Angeles-based Atlantic Richfield Co., the largest soft money donor in the state during the same period, contributed $79,000 to the California Republican Party and $10,000 to the Democrats.

No Comment on Donations

In Phoenix, a spokeswoman for Continental refused to comment when she was asked why the company had contributed $85,000 to the California Democratic Party. Keating could not be reached for comment, nor could California Democratic officials.

In addition, the study showed that Keating contributed $100,000 in soft money to the Florida Republican Party.

Critics of soft money contend that it is a back-door way for corporations and unions to continue giving to federal campaigns after their political action committees have donated the maximum permitted under FEC rules.

Cranston was one of two members of the Senate Banking Committee who were involved in the 1987 meeting with officials from the Federal Home Loan Bank in San Francisco to discuss the Lincoln case. The other was Sen. Donald W. Riegle Jr. (D-Mich.), who announced in March that he was returning about $70,000 in contributions from Keating and American Continental to avoid the appearance of a conflict of interest.

Senators Keeping Money

But Greenaway said Cranston will not return the money because “we don’t believe there is even the appearance of conflict of interest.” The other three who attended the meeting, Sens. John Glenn (D-Ohio), Dennis DeConcini (D-Ariz.) and John McCain (R-Ariz.), have taken a similar position regarding contributions they received from American Continental.

Like Keating, Cranston was a critic of the philosophy of then-Federal Home Loan Bank Board Chairman Edwin J. Gray. Keating contended that he was being harassed by federal regulators because he is a strong proponent of savings and loan deregulation. Gray favored stricter control.

Cranston and the other senators said that they were worried that federal regulators in San Francisco were forcing low reappraisals of real estate owned by Lincoln, which would have contributed to a projected $167-million write-down of its assets.

Under the settlement, Lincoln agreed to raise about $160 million in new funding. In return, the board transferred supervision of Lincoln from the federal agency’s field office in San Francisco to its main office in Washington.

Fed Reported Angered

The Washington Post reported last week that officials of the Federal Reserve Board, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. were angered by the action of the Federal Home Loan Bank Board in this case because they viewed it as proof that savings and loan regulators are controlled by the industry.

As for the contribution to the state Democratic Party, Greenaway said Cranston did not benefit from those funds. He said Cranston, who spent a record $13 million on his 1986 campaign, himself raised between $3 million and $5 million in soft money nationally in 1986--some of which he spent on a get-out-the-vote drive that was independent of the state party.

Other soft money contributors in California during the 1985-86 election cycle were Coopervision Inc., $47,000 to the Republicans; Carter Hawley Hale Stores Inc., $6,500 to the Democrats, $25,000 to the Republicans; the Irvine Co., $7,500 to the Democrats, $22,000 to the Republicans; Community Bank, $27,000 to the Republicans; Union Oil Co. of California, $5,000 to the Democrats, $22,000 to the Republicans; Jaywin Inc., $25,000 to the Democrats; Virco Manufacturing Corp., $21,300 to the Republicans; BankAmerica Corp. $5,900 to the Democrats, $8,000 to the Republicans.