Bane Given $18,000 by 2 Firms Favored in Failed Bill

Shortly after accepting $18,000 in campaign contributions from two financial institutions early last year, Assemblyman Tom Bane (D-Tarzana) introduced legislation that opponents said would have aided the two firms in a pending multimillion-dollar lawsuit.

The measure, introduced by Bane in February, 1988, prohibited litigants in civil lawsuits from obtaining confidential information from the state Department of Savings and Loans through a subpoena. The bill, supported by the California League of Savings Institutions, passed the Assembly with no opposition last year but died in the Senate.

An Assembly consultant and the bill’s opponents say the measure could have been retroactive, thereby affecting the pending lawsuit. The defendants in the case were financial institutions seeking to prevent documents obtained from the savings and loans department with a subpoena from being introduced as evidence against them. Both were major contributors to Bane.

Bane did not return phone calls Friday. The Daily News of Los Angeles reported that he said he did nothing improper, quoting Bane as saying he intended to prevent disclosure of all confidential savings and loans department records without a court order, including those involved in the pending legal case.

Bane, chairman of the influential Rules Committee and a champion of the savings and loan industry, reportedly said: “I would have introduced the bills if there were no contributions. Anything wrongly obtained should be returned.”

Clarify Existing Law

The Department of Savings and Loans said the measure would merely clarify existing law, said Kenneth Cooley, chief counsel for the Assembly Finance and Insurance Committee, which unanimously sent the bill to the Assembly with little discussion. He said such a clarification could have been considered retroactive, although Assembly committee members were not informed that it might apply to an ongoing lawsuit.

The retroactive provision of the bill could have affected pending litigation involving American Savings & Loan of Stockton, which was then financially ailing and has since been divided into two financial institutions, and Gramercy Mortgage, a Burlingame-based affiliate of Homestead Savings.

Both companies were named in a December, 1982, lawsuit filed by Dividend Development Corp. of Santa Clara. Dividend alleges that American and Gramercy improperly foreclosed on two large real estate projects in the Bay Area and is seeking $40 million in damages. The suit accuses Homestead of fraudulent misrepresentation and concealment, breach of contract and unfair business practices. Homestead filed a countersuit against Dividend; the litigation is pending.

Dividend Development used a subpoena in 1985 to obtain confidential state Department of Savings and Loans documents about the foreclosure that “severely impeach Homestead’s defenses and claims in the litigation,” said Peter Fortune, Dividend’s attorney. Homestead claimed the documents were released illegally and had sought unsuccessfully in court to suppress the materials.

Bane received a $6,000 campaign contribution from Gramercy on Jan. 11 and another $6,000 Feb. 1. On Jan. 25, he received a $6,000 contribution from American Savings & Loan. He had also received $5,000 from each firm in early 1987. The contributions coincide with Bane’s Valentine’s Day dinner, his major annual fund-raiser. He introduced the savings and loan bill Feb. 17.

After the bill passed the Senate Banking and Commerce Committee in June, Dividend hired lobbyist Herb Nobriga, a former consultant to the Assembly Judiciary Committee, to oppose it. Nobriga said he informed banking committee Chairwoman Rose Ann Vuich that the measure could affect the pending Dividend lawsuit. Vuich then retrieved the bill for a second look by her committee in August.

Legislation Failed

“We don’t like to pass out legislation that affects a court case,” she said Friday. She added that it died when Bane failed to ask for it to be heard again.

State law makes it illegal to accept contributions in return for a specific action, such as sponsoring or supporting a bill. Bane has maintained that the savings and loan industry backs him because he supports their role in financing home construction and creating jobs.

Bane ran a national savings and loan association for a decade. He received a total of $102,480 in campaign contributions from savings and loans in 1987-88, nearly 10% of the $1.1 million he raised, according to campaign reports.

Alan C. Miller reported from Los Angeles and Mark Gladstone from Sacramento.