Bush Hints He May Oust Top Thrift Overseer

President Bush, commenting on the Lincoln Savings & Loan scandal for the first time, said in an interview published Saturday that he is considering whether to remove M. Danny Wall as the nation’s chief thrift regulator in the wake of a congressional investigation.

Meanwhile, Edwin J. Gray, Wall’s predecessor at the Federal Home Loan Bank Board, refused to discuss a published report that the FBI has questioned him about efforts by Sen. Alan Cranston (D-Calif.) and four other senators to intervene with regulators on Lincoln’s behalf.

Bush said if he decides that the nationwide savings and loan crisis occurred in part because federal regulators were not aggressive enough in cracking down on problem thrifts, he will make changes.

“I have to do that,” the President said.

While he acknowledged he is concerned that the credibility of the government’s regulatory structure has been threatened by the savings and loan debacle, the President said he did not want to prejudge Wall at this time.

But he praised Rep. Henry B. Gonzalez (D-Tex.), chairman of the House Banking Committee, for his “tenacity” in pursuing an inquiry into the collapse of Lincoln, expected to be the nation’s biggest thrift failure with an estimated cleanup cost of $2 billion.

Gonzalez has sent a letter to the President asking for the removal of Wall from his post as director of the Office of Thrift Supervision, charging that he was responsible for “costly failures” in the thrift industry.

Wall, who also headed the Federal Home Loan Bank Board from July, 1987, until it was replaced by the Office of Thrift Supervision last August, could not be reached Saturday for comment.

Although he saluted Wall’s chief accuser, the President did not say a single good word about Wall, who is accused of blocking efforts by federal regulators in San Francisco to seize the Irvine savings association in 1987 on grounds they were too “zealous.”

Wall also met privately three times with Charles H. Keating Jr., the Arizona financier who controlled Lincoln’s parent firm, while the case was pending. The parent company filed for bankruptcy court protection the day before the government finally seized Lincoln last April.

In a series of interviews, Wall has defended his actions as prudent oversight and charged that Gonzalez’s investigation has been unfair and one-sided. He and Keating are scheduled to testify before the committee on Nov. 21.

In another comment, Bush compared the S&L; crisis to the situation at the Department of Housing and Urban Development during the Ronald Reagan Administration when a reporter asked him if keeping Wall on the job might lessen the credibility of the regulatory process.

“You raise a very important question,” Bush said. “And just as (HUD Secretary) Jack Kemp came into HUD and found things that, though maybe not illegal, were clearly improper, he moved to do something about it. And I think that we’re going to have to do that in other areas as well. So yes, it’s a matter of concern.”

Asked if he were leaving the door open to replace Wall, the President replied: “I didn’t say that, but I’m not closing the door on it. I just don’t know at this juncture.

“But when the question is put, if part of the savings and loan problem proves to be management or regulation people that aren’t aggressive enough, would you make changes, the answer will be yes. I have to do that.”

Bush added, however: “I just don’t want to . . . prejudge on my part the Wall situation at this time.”

The President made the comments during an interview Friday with Texas reporters. Their stories were published Saturday.

Bush said he would reply to Gonzalez’s letter “fairly soon,” but he could not say at this point whether the Texas Democrat was justified in his request for Wall’s ouster.

Referring to the House Banking panel’s investigation into Wall’s actions as well as the efforts by five U.S. senators to intercede on behalf of Keating with Wall’s predecessor in the top regulatory post, the President said:

“I know it’s painful for some, but I would salute Chairman Gonzalez’s tenacity in these hearings.”

In a separate development, Gray refused Saturday to discuss a report that he has been questioned by the FBI about the efforts of the five senators to intervene on behalf of Lincoln.

A report published in the Boston Globe quoted two unnamed “well-placed sources” as saying the FBI questioned Gray last week. It was the first indication that the Justice Department may have started an inquiry into the activities of the five senators.

“I don’t think it’s appropriate to talk about,” Gray said from his home in Miami. “I just want to say no comment.”

Gray has testified to the House committee that Sen. Dennis DeConcini (D-Ariz.) suggested that the bank board lift a regulation curbing high-risk investments by Lincoln if Lincoln would increase its home mortgage lending at meetings in April, 1987.

Other senators present at both meetings were John McCain (R-Ariz.) and John Glenn (D-Ohio). The chairman of the Senate Banking Committee, Sen. Donald W. Riegle Jr. (D-Mich.), attended the second meeting only.

The five senators had received $1.3 million in political contributions or other benefits from Keating before the 1987 meetings. When asked whether the lawmakers were assisting him because of the money he contributed, Keating replied: “I certainly hope so.”