Financial Deals Studied : Insecurity About Money Behind Wright’s Troubles

To hear him tell it, House Speaker Jim Wright (D-Tex.) never thinks about money.

“My interest all my life has not been business success,” he says frequently. “I don’t pay any attention to my investments. I like it that way, frankly. It doesn’t distract me.”

But in fact, Wright cares much more about money than he would have people believe. A strong note of self-pity tinges his voice whenever he recounts--as he often does--his financial reversals, beginning with a huge personal debt he was forced to pay off after his unsuccessful campaign for the Senate in 1961.

“My finances are in shambles,” he wrote in his personal diary in 1971. “With what unbelievable folly have I so long ignored them and let them drift. In my 30th year I was the richest young man in town. In my 50th year--well. I’m driving a 10-year-old car, owe so god-awful much money. I’ll need luck to pay it off, but I will, somehow, I will.”

The truth is that Wright, 67, a man who rose to the nation’s third-highest office without the vast personal wealth of some other Texas politicians, has spent much of his life struggling to achieve a degree of financial security commensurate with his success in politics. He has never met his own expectations.

Indeed, according to friends, it was Wright’s insecurity about money as much as anything else that drew him into the questionable financial transactions now under investigation by the House Ethics Committee. It was his desire for security that caused him to take the ethical risks that now threaten to deprive him of his speakership and embarrass the Democratic Party.

Whatever his motivations, Wright’s tangled financial affairs have provided his political opponents with ample material for a campaign of public vilification whose underlying motivation centers not on his ethics but instead on the success with which the Speaker has pursued his highly partisan agenda.

Even some of Wright’s harshest critics admit that his personal financial problems--no matter how serious--probably would not be under investigation if he had not gotten under the skin of so many Republicans in his two-plus years as the consistently effective leader of the Democratic majority.

As Rep. William M. Thomas (R-Bakersfield) put it, Republicans feel strongly that Wright enjoys “sticking it to you. . . . That’s a part of Jim Wright’s problem. He fails to understand what’s equitable and fair. It’s the arrogance of power.”

Financial Misadventures

With that kind of predisposition, Republicans have naturally seized upon Wright’s financial misadventures. The charges against him involve investments of Byzantine complexity:

--That Wright benefited from an investment company he formed with Texas developer George Mallick while passing legislation designed to benefit his business partner.

--That he improperly pressured the chairman of the Federal Home Loan Bank Board to assist troubled Texas savings and loan associations.

--That he skirted limits on outside income for congressmen by publishing a book that was sold in large numbers to special-interest groups.

Wright’s approach to money and power were shaped by his own upbringing--both personal and political.

Desire to Excel

The son of an itinerant sales promoter, Wright grew up in Texas and Oklahoma at the end of the Depression. According to family members, Wright’s father, James Claude Wright Sr., instilled in his children a strong desire to excel in everything they did.

Politically, Wright is pure Texas. After serving in the Texas House and as mayor of Weatherford, Tex., a small town outside of Ft. Worth, he was elected to the U.S. House of Representatives in 1954 and came to Congress at a time when both chambers were led by Texas Democrats--Majority Leader Lyndon B. Johnson in the Senate and Speaker Sam Rayburn in the House.

It was at Rayburn’s knee that Wright learned to wield power in a way that angers Republicans. And it was in his effort to succeed Johnson in the Senate in 1961, shortly after the majority leader became vice president, that Wright suffered his first financial setback.

Wright, who has noted that he owned a home, a ranch, several cars and some rental property when he was elected to Congress in 1952, ended his unsuccessful 1961 Senate bid with a debt in excess of $40,000. By his own account, he then borrowed between $80,000 and $90,000 to repay the debt--a loan that took him nearly a dozen years to repay.

Wright said he later learned that even wealthy politicians do not pay off campaign debts that way. His reference was to the common practice among politicians of relying, instead, on contributions from their supporters to pay off such debts.

Difficulties Exacerbated

Wright’s financial difficulties were exacerbated by his divorce and remarriage in the early 1970s. Not only did he leave the first marriage virtually penniless, but his second wife, Betty, is a woman with expensive tastes.

These events compounded Wright’s existing insecurity about money--a trait the Speaker shares with many congressmen of modest means who come to Washington to live on fixed congressional salaries and find themselves thrust into a society dominated by millionaires.

“He cares about money a lot,” said one of the younger Democrats in the House who knows Wright well. “He’s not unusual in that regard. Most guys here who are over 50 care about money a lot. They are very insecure about it.”

Wright’s investments, including those under investigation by the House Ethics Committee, were designed to rescue Wright from his financial plight.

“He needed the money,” said Dee Kelly, a Ft. Worth lawyer, former Rayburn aide and admirer of Wright. “In the past, (such investments) hadn’t been a hindrance to men in public life. . . . He’s felt he ought to be able, within the constraints of House rules and law, to make investments and improve his economic status. I think he felt he could make a legitimate investment, and I think that is the basis of his problems today.”

Financially, the investments succeeded. According to his financial-disclosure statements, the Speaker’s net worth soared to $900,000 in 1983 before tapering off as a direct result of problems in the Texas economy. In 1987, his net worth was approximately one-third of what it had been five years earlier.

According to friends, Wright got involved in a host of financial ventures at the encouragement of his wife, Betty, who exerts a strong influence over his professional and personal life.

“He is very devoted to her,” said a House Democrat who is close to the couple. “She brought into his life something he never had there. She likes the finer things. He has tried to provide those and in doing so has made errors in judgment. He’s not into clothing, fine jewelry. He’s not into material things. But he went along with a lot of this. She teamed up with Mallick and now he (Wright) is paying.”

When Wright and Betty were married in 1972, he was broke. In fact, Wright has said in the past that, because of his many debts, he initially resisted Betty’s entreaties to marry. He felt that with his severe financial problems he was “doing a lady no favor” by marrying her.

Wright was a senior Democrat on the House Public Works Committee when they met, and his new wife served on the committee staff. When questions of propriety were raised, she was forced to find employment in the private sector.

Loves Washington Life

Unlike Wright’s first wife, Mab, who never cared much for Washington, Betty is by all accounts a force to be reckoned with in the social whirl of congressional wives. Her particular passion is the theater. She sits on the boards of two local theaters, has raised money for the Actor’s Fund and enjoys hobnobbing with Hollywood stars.

One House Democrat noted that Wright’s “life style changed when Betty came on the scene.” She played a particularly important part in Wright’s business relationship with Mallick--one of the many financial connections apparently being explored by the Ethics Committee.

Until 1987, Wright, Mallick and their wives were partners in an investment company known as Mallightco. Wright’s investment in Mallightco yielded at least $17,502 in 1986, and Mrs. Wright drew a salary from the company at one time for doing research on real estate transactions.

After Wright caused a furor by using his power to secure $30 million in federal appropriations for developing the old Ft. Worth stockyards, a project in which Mallick had some interest, the Speaker put his Mallightco holdings into a blind trust and ordered that it be liquidated. It is not known how those assets were disposed of, but Mrs. Wright has retained control of a 1979 brown Cadillac that she is said by a spokesman to have borrowed from the corporation in 1983.

The Wrights’ relationship with Mallightco also provided them, for a daily fee of $21.67, with the use of an apartment owned by Mallick’s son, Steven, whenever they went to Ft. Worth. Last year, they purchased the apartment from Steven Mallick for $58,500.

Typical of Businessmen

George Mallick has insisted that he never asked Wright for any favors in exchange for the investment help that he gave the Speaker. Several House members interviewed over the last week said that Mallick is typical of many prominent businessmen in their home districts who seek the friendship of politicians--particularly powerful ones.

“There are people out there who want to help you (financially),” said a California Democrat who asked not to be identified. “If you make it known you need help, you will find people who want to help. Mallick’s that guy. He’s a guy who wants to be helpful. He likes politicians. There are people like that. In fact, Mallick’s been helpful to people all over Capitol Hill.”

Another politician with many years of experience both in Washington and Texas called Wright typical of politicians of high ideals but modest means, who are trying to make money and serve the public at the same time.

“So they get caught up in all these deals and sugar-daddy relationships back home,” he said. “Guys like that get the opportunity to invest in projects. Sometimes they have to put money in, sometimes they don’t. They don’t view that as anything unethical or illegal. It’s just commonly done. Sometimes they cross the line. Sometimes they forget where the line is.”

Although there is no evidence that Mallick ever benefited financially from Wright’s efforts, he certainly had a strong interest in developing the stockyards when the Speaker arranged for federal funding of the project in 1986 and 1987. The money was appropriated but never spent because the stockyards project stalled, and Mallick, who later pulled out of the venture, claims he was seeking private investors, not federal money.

Pork-Barrel Politician

Federal funding of the stockyards project demonstrates Wright’s tremendous effectiveness as a pork-barrel politician, a skill he honed on the Public Works Committee. Orson Swindle, then the director of the Economic Development Administration, has said the stockyards project would be a waste of taxpayers’ money and accused Wright of abusing his power. “It was ludicrous,” he added in a recent interview.

A study published by the Dallas Morning News said $5.5 billion in federal funds was poured into Wright’s Tarrant County in 1986, making it the most money spent that year in any locality on a per capita basis. In 1987, it slid to fourth in the national rankings.

Wright’s reputation in the Ft. Worth area is that of a man who will help virtually anyone who comes to him from his home district. As one Texas Democrat remarked: “Someone told me once that Wright had a heart of gold--that if someone was in trouble, he would go out on a limb for him, even if he didn’t deserve it.”

According to Wright himself, it was in this spirit of helping constituents that he intervened with federal regulators in 1986 to help a real estate investor and two savings and loan executives from Texas. Allegedly to bring pressure on the regulators, Wright postponed action on legislation that would have provided an infusion of money for the Federal Savings and Loan Insurance Corp. Wright himself had no known financial stake in the deal.

L. William Seidman, chairman of the Federal Deposit Insurance Corp., says Wright did more than the normal amount of looking out for constituent interests. Seidman said Edwin J. Gray, who as former chairman of the Federal Home Loan Bank Board was the nation’s top S&L; regulator, “used to weep on my shoulder about what he was asked to do” by Wright.

Got Investment Opportunity

Likewise, Wright argues that it was “natural and proper” for him to intervene with then-President Anwar Sadat of Egypt on behalf of Neptune Oil Co., a Texas-based company that was having trouble with an investment in the Sinai Peninsula. About the same time, Wright was given an opportunity by Neptune’s owner, Richard Moncrief, to invest in some natural gas ventures in East Texas.

“He intervened from time to time for a friend, probably when he should have said no,” said a knowledgeable Texas Democrat who declined to be identified. “The people around him urged him on. As a result, he got himself embarrassed.”

Another Texas crony, Carlos Moore, a Ft. Worth printer, convinced Wright in 1984 to publish a 117-page book of his own sayings and essays. Critics charge that the book, titled “Reflections of a Public Man,” was published in part with the idea of selling it to lobbyists and thus circumventing the limit on income that a member of Congress can receive from special interest groups. Wright received a 55% royalty on all books sold, and at the latest reckoning nearly a year ago, he had accepted more than $55,000.

Among House members, authorship of books like Wright’s is permitted by a well-known but seldom-used loophole in the House rules that limit outside income. Most members do not take advantage of it, according to one California Democrat, because “we all kind of agree that it is a really sleazy thing to do.”

Although no one outside of Wright’s lawyer, William Oldaker, knows precisely what the Ethics Committee has found during its intensive investigation of his financial dealings over the last four decades, Wright and his defenders have expressed confidence that he will be found guilty of nothing worse than an occasional lapse in good judgment.

Could Be Swept Away

Even if Wright’s errors prove to be insignificant, however, his friends fear the Speaker could be swept away in a Republican reaction to the Senate Democrats’ rejection of John Tower as defense secretary.

Democrats argue that Republicans have singled out Wright for an investigation not because he is particularly unethical but because he is the Speaker. “They do this to every Speaker--to every person who occupies that chair--because they covet that chair,” said Rep. Tony Coelho (D-Merced), who is two steps behind Wright in the Democratic leadership.

Indeed, since Wright succeeded Thomas P. (Tip) O’Neill Jr. (D-Mass.) in January, 1987, he has piled up an impressive record of legislative victories, particularly his defeat of aid to Nicaragua’s Contras.

Republicans object almost as much to the way Wright operates as to his record of success. To describe Wright, they use words such as “ruthless,” “condescending,” “patronizing” and “vindictive.”

Republicans charge Wright with using his power to prevent them from offering amendments to important pieces of legislation and to deny them adequate representation on committees. Minority Leader Robert H. Michel (R-Ill.) complains privately that Wright refuses to compromise with Republicans the way O’Neill did.

‘It’s Really Patronizing’

Rep. Thomas said Republicans even object to the way Wright tries to be friendly and conciliatory in the aftermath of a political battle. The Speaker, he said, believes he has “a right to let you win or lose--it’s really patronizing.”

Wright insists that he has never sought political vengeance. In a handwritten letter to a Times reporter last June 22, the Speaker said: “I honestly don’t think you can find a single case in which I have ever behaved vindictively toward anyone for opposing me politically. . . . I do not believe it right or just to use the powers of government to punish those on the other side.”

Even among his fellow Democrats, however, many find Wright to be uncomfortably aloof. “He thinks his position is usually right and he doesn’t need any help,” said a California Democrat. “You never see him talk to people and get their advice.”

Last month, for example, when Wright caved in to Republican pressure to give the House an opportunity to kill a scheduled 50% congressional pay raise, he did so without discussing the matter with many Democrats who were publicly supporting the proposal.

Wright’s operating style leaves him vulnerable as the ethics investigation comes to a conclusion. “He does not have a reservoir of close friends in the House to draw from,” noted former Rep. Jim Jones (D-Okla.).

Foley Likely Successor

The Ethics Committee may make its report on Wright public shortly after the House returns April 3 from its Easter recess. If the case against him forces him out of the speakership, his most likely successor would be House Majority Leader Thomas S. Foley (D-Wash.), an articulate, cerebral moderate with a reputation for being scrupulously fair and inclined toward bipartisan approaches on many issues.

With Foley as Speaker, the partisan bitterness that deeply divides the House would probably recede, and many Democrats who now fear having “the Wright issue” used against them in tight races could breathe a lot easier.

With Wright at the helm, the Democrats seem clearly hobbled. The Speaker has backed away from battles over not only the congressional pay raise but also a bill requiring the President to notify Congress of all overseas covert operations and a proposal to require reporting by foreign investors in the United States.

“He’s giving in to everything now,” said one House Democrat. “He’s showing fear.”

Staff writer J. Michael Kennedy in Houston contributed to this story.