Regulator Confirms He Met With Owner of Lincoln S&L; : Thrifts: M. Danny Wall says the private sessions didn’t influence his agency’s decision to spare the company from seizure.

M. Danny Wall, the chief federal regulator of the thrift industry, acknowledged Friday that he had met privately with the owner of Lincoln Savings & Loan shortly before his agency rejected a recommendation from its San Francisco office in 1987 to seize the failing Irvine institution.

Wall, who now heads the Office of Thrift Supervision, the successor agency to the Federal Home Loan Bank Board, said in an interview that he had three meetings and one telephone conversation with Charles H. Keating Jr., Lincoln’s operator, while he was FHLBB chief.

He was responding to charges by House Banking, Finance and Urban Affairs Committee Chairman Henry B. Gonzalez (D-Tex.) that Keating’s personal pleas had persuaded the bank board not to seize Lincoln in 1987. Federal regulators took over Lincoln nearly two years later, and the delay cost taxpayers an estimated $2 billion and deprived many unsuspecting investors of their life savings.

Wall, who has been subpoenaed to testify about the Lincoln affair before the House committee Nov. 7, said he and Keating had been personal acquaintances before their meetings at the bank board office.

But he said Keating had no special access, that he requested nothing improper and that the meetings did not affect the board’s decision not to seize Lincoln at that time.

Keating, who has been charged with milking Lincoln’s assets and thus precipitating the worst savings and loan disaster in the nation’s history, had been introduced to Wall several years earlier in the office of Sen. Jake Garn (R-Utah). Before heading the bank board, Wall was an adviser to Garn.

Wall said he had always known Keating as a man prone to “pontificating . . . someone who thought very much of his own opinion, who wanted to talk and not listen.” But when Keating met with him at the bank board in 1987 and subsequently, Wall recalled, “his self-confidence over his being in a regulated business was eroding.”

He said the freewheeling businessman was temperamentally “not cut out” for the management of a business under federal and state regulation.

After Lincoln was bought in 1986 by Keating’s company, American Continental Corp. of Phoenix, it shifted its investments into junk bonds, undeveloped real estate and other risky ventures. It is estimated that the failure of Lincoln, which was seized by the government last April, led to a $2-billion federal payout to insured depositors.

L. William Seidman, chairman of the Federal Deposit Insurance Corp., which has taken control of Lincoln’s assets, testified before the Gonzalez committee earlier this week that he thought it was improper for Wall to have met with Keating at the time the bank board was reviewing a recommendation from its San Francisco office about action against Lincoln.

“I am of a different view,” Wall declared in the interview. He said he has always been willing to meet with disgruntled savings and loan officials. “I have been in public service for 28 years. I will meet and talk to anyone. Of course, there are times when, legally, I can’t. I certainly do it whenever time permits.”

Wall said Keating first came to see him at the bank board on Sept. 24, 1987, about four months after the San Francisco regulators found cause to recommend supervisory action against Lincoln. Wall said he had not read the report from San Francisco at the time of the meeting but that Keating’s visit brought it to his attention.

He said Keating called on him to bring the matter, which had been the subject of a 16-month investigation, to a speedy conclusion.

Like many other thrift officers who came to see him, Wall said, Keating often complained about how he was being treated by officials in the San Francisco office. But Wall said he dismissed those complaints as nothing he had not heard before in other cases.

“They always say, ‘They are out to get me--they don’t like me,’ ” he said. “What else would you expect someone to say?”

After the first meeting with Keating, Wall ordered an independent review of the matter by senior staff in the Washington headquarters. The office in San Francisco was prohibited from performing supervisory and examination activity.

Carl Hoyle, a spokesman for Wall, said Friday that an independent review was necessary because the earlier audit was no longer valid. He said Lincoln’s financial picture had improved and, by December, the thrift had hired a new chief executive who had the confidence of the bank board.

The second review led to a decision not to take supervisory action against Lincoln.

Keating again came to see the bank board chairman Jan. 28, 1988, complaining about press “leaks” regarding the board’s dealings with Lincoln, which he alleged were coming from the San Francisco office, Wall said. He said his reaction to Keating’s complaint was that “you know full well there is nothing I can do about that.”

Finally, on Jan. 17, 1989, Keating paid his last visit to Wall’s FHLBB office, Wall said. He came at a time when the board was closing in on Lincoln for suspected violations of a number of regulations. Wall said Keating told him, “I’ve had enough, I want to get out,” and declared his intention to sell Lincoln.

Wall later received a follow-up call on that visit from Keating after he had located a potential buyer. Sens. Alan Cranston (D-Calif.) and Dennis DeConcini (D-Ariz.) also telephoned Wall at the time and asked him to approve the sale, which was rejected by FHLBB.

Although Wall knew Keating before he went to work for FHLBB, he denied charges leveled by Gonzalez that as a Garn aide he had solicited donations from Keating for the Garn Institute of Finance at the University of Utah.

Both Lincoln and American Continental made contributions to the institute in 1986, according to Elaine Weiss, an official of the fund. The donations reportedly amounted to more than $25,000. A Keating spokesman and fund officials supported Wall’s contention that he never raised funds for the Garn Institute.

Wall said he had attended two institute board meetings on behalf of the senator before becoming FHLBB chief. Weiss said Wall also has served as a program speaker for the institute from time to time.

NEXT STEP Charles H. Keating Jr., chairman of Lincoln’s parent firm, American Continental Corp., and M. Danny Wall, head of the Office of Thrift Supervision, are scheduled to testify at House Banking Committee hearings Nov. 7.