THE SALE OF AMERICAN SAVINGS : David Stockman Considered--Briefly--to Head FCA

One of the odder episodes in the regulatory history of Financial Corp. of America occurred the summer afternoon that David Stockman, then White House budget director, dropped in on Edwin J. Gray, chairman of the Federal Home Loan Bank Board.

As recounted by Gray and others, here’s what happened:

It was late August, 1984, when American Savings was experiencing a potentially fatal outflow of deposits, and Gray was applying heavy pressure on Charles W. Knapp to resign as chairman and chief executive of FCA, American Savings’ parent.

Upon arriving in Gray’s Washington office, Stockman dropped a bombshell: Knapp wanted him to be FCA’s new chief executive, and Stockman wanted to know what Gray thought of the idea.

Balloon Went Nowhere

As the architect of President Reagan’s initial attempt to cut the federal budget, Stockman was one of the Administration’s best-known figures. But the prospect of the lofty Stockman as Knapp’s successor left Gray cold.

Not only did he want to install his own man--William J. Popejoy--in the job, Gray viewed Stockman as inexperienced in banking matters and as someone who represented a last-ditch effort by Knapp to name his own successor.

Gray spent the meeting trying to discourage Stockman, but he did not say no--because, legally, he could not. It was up to FCA’s board to name Knapp’s successor--at least officially.

As it turned out, the Stockman balloon got nowhere. James A. Baker III, then the White House chief of staff, flatly opposed the plan because he did not want a major staff change so close to the November, 1984, election.

Stockman got the message. After talking to Baker and others, he told Gray by phone a short time later that he had no interest in the job. He relayed the same message to Knapp.

“It was bizarre, to say the least,” Gray said.

Knapp and Stockman, both investment bankers now, declined to comment.