Wall Refuses to Resign as Top S&L; Regulator

Embattled savings and loan regulator M. Danny Wall refused to resign Monday and said President Bush “wants to hear the other side of the story.”

Bush said in an interview published Saturday that he is considering whether to dismiss Wall, who is under fire for his handling of the investigation of Lincoln Savings & Loan in Irvine.

But Wall, after testifying at a congressional hearing Monday, told reporters that the President “knows that one is innocent until proven guilty.” He said he had acted properly in handling the case of Lincoln, which suffered a financial collapse that may ultimately cost the taxpayers $2 billion, making it the biggest single thrift failure.

“We knew far less than people think we did,” said Wall, who rejected a recommendation by federal regulators in San Francisco in 1987 that the Federal Home Loan Bank Board seize Lincoln then. Instead, the bank board seized Lincoln in April of this year, after its losses had mounted substantially.

“We had insufficient basis to take the actions (the San Francisco regulators were) asking for,” Wall said. He was chairman of the bank board then and is now chairman of its successor agency, the Office of Thrift Supervision.

The Lincoln issue has become politically explosive because of efforts by five senators, including Sen. Alan Cranston (D-Calif.), to intervene with federal officials on Lincoln’s behalf.

Wall said Monday that Cranston’s calls to him in 1987 and 1989 were “perfectly appropriate.” In 1987, Wall said, Cranston urged a prompt decision on a pending regulatory review of Lincoln, and in 1989 Cranston asked for a rapid decision on whether the government would permit the sale of Lincoln to outside investors.

Senate Majority Leader George J. Mitchell (D-Me.) said Monday that the Senate Ethics Committee is conducting a serious inquiry into the actions of the five senators: Cranston, Donald W. Riegle Jr. (D-Mich.), John Glenn (D-Ohio), Dennis DeConcini (D-Ariz.) and John McCain (R-Ariz.).