Opponents Criticize Assemblyman Bane Over S&L; 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 last February, prohibited litigants in civil lawsuits from obtaining confidential information from the state Savings and Loan Department 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 that who were seeking to prevent documents obtained from the Savings and Loan Department with a subpoena from being introduced as evidence against them. Both were major contributors to Bane. Representatives of the two financial institutions could not be reached for comment Friday.

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 that he intended to prevent disclosure of all confidential Savings and Loan 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.”

The Savings and Loan Department said that the measure would merely clarify existing law, said Kenneth Cooley, chief counsel of the Assembly Finance and Insurance Committee, which unanimously sent the bill to the full 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 bill could have affected pending litigation involving American Savings & Loan of Stockton, which has since been sold and 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 attorney Peter Fortune said Friday that the suit alleges American and Gramercy improperly foreclosed on two large real estate projects in the Bay Area and is seeking $40 million in damages. He said 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 Savings and LoanDepartment documents about the foreclosure that “severely impeach Homestead’s defenses and claims in the litigation,” Fortune said. Homestead claimed that the documents were released illegally and had sought unsuccessfully in court to suppress the information.

Bane received a $6,000 campaign contribution from Gramercy on Jan. 11, 1988, and another $6,000 on Feb. 1. On Jan. 25, 1988, he received a $6,000 campaign contribution from American Savings & Loan. Each firm also gave him $5,000 in early 1987. The contributions coincide with the timing of Bane’s annual Valentine’s Day dinner, his major annual fund-raiser. He introduced the savings and loan bill on Feb. 17, 1988.

After the bill passed the Senate Banking and Commerce Committee last June, Dividend Development hired a lobbyist who subsequently informed Banking Committee Chairwoman Rose Ann Vuich (D-Dinuba) that the measure could affect the company’s pending lawsuit. Vuich then retrieved the bill for a second look by her committee in August.

“We don’t like to pass out legislation that affects a court case,” she said Friday. An aide to Bane 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, who ran a national savings and loan association for a decade, received a total of $102,480 in campaign contributions from the industry in 1987-88, nearly 10% of the $1.1 million he raised, according to his campaign reports.

Miller reported from Los Angeles and Gladstone from Sacramento.