Edwin J. Gray, former chairman of the Federal Home Loan Bank Board, Sunday singled out Sens. Alan Cranston (D-Calif.) and Dennis DeConcini (D-Ariz.) for blame among the five senators who intervened with federal regulators on behalf of Lincoln Savings & Loan and its owner Charles H. Keating Jr.
Asked Sunday if any of the five senators involved were "more culpable than others," Gray replied, "Yes, absolutely," and then named Cranston and DeConcini. Gray headed the nation's regulatory system for the S&Ls; until June, 1987.
At a key meeting on April 2, 1987, Gray said, DeConcini urged the bank board to withdraw a new regulation that would have required Lincoln and other S&Ls; to devote more of their loans to traditional home mortgages and less to speculative investments. Keating, who bought the Irvine, Calif.-based Lincoln S&L; in 1984, strongly opposed the regulation because he wanted to use Lincoln's deposits to invest in Arizona real estate.
Asked who was "more culpable," Gray said: "DeConcini, who made the proposal (to withdraw the new regulation), who has continued to stonewall and deny it.
"And Sen. Cranston, who after those meetings, went back to Phoenix and he got $850,000 for some phony voter registration groups to help him with his election, and he also . . . went to Keating and asked for $75,000 or $80,000 for the California Democratic Party." Cranston organizations received nearly $900,000 of the $1.3 million that Keating contributed to the campaigns of the five senators or to other groups controlled by them.
Gray, an appointee of former President Ronald Reagan, and Cranston, the Democratic whip in the Senate, long have been at odds and have exchanged bitter charges in recent weeks as the collapse of Lincoln has emerged as a major political and regulatory scandal.
The failure of Lincoln is expected to cost taxpayers about $2 billion. Rep. Jim Leach (R-Iowa) said last week that the Lincoln bailout will cost every American family an average of $50. In addition, 24,000 people, many of them elderly Californians, stand to lose more than $200,000 that they invested in bonds issued by American Continental Corp., Lincoln's parent company.
The Senate Ethics Committee is investigating DeConcini and Cranston, as well as Sens. John Glenn (D-Ohio), John McCain (R-Ariz.) and Donald W. Riegle Jr. (D-Mich.) to see whether they pressured federal regulators to go easy on Lincoln in exchange for campaign and other contributions.
There are conflicting accounts of what took place at the key April, 1987, meeting. Cranston, denying that he pressured Gray to help Keating, has said that Gray had "either fabricated or misunderstood" what took place. In response, Gray accused Cranston of lying about his efforts to help Keating.
For their part, all five senators have denied that they were influenced by contributions given by Keating. Instead, they have characterized their intervention as service for a constituent.
McCain, who with Glenn was also interviewed on ABC-TV's "This Week With David Brinkley," said that he attended the 1987 meeting with Gray because American Continental was a large employer in Arizona and because the firm's failure would cost many jobs. Glenn said that he believed Keating might have a legitimate complaint about overzealous federal regulation but that he learned instead of the possibility that criminal charges would be filed against Keating.
While both denied any wrongdoing, McCain conceded that the appearance of the meeting is suspect. "I think the appearance of that meeting . . . was a mistake," McCain said.
Host David Brinkley said that the three other senators--Cranston, DeConcini and Riegle--had been invited to appear on the show, but declined.
Brinkley asked: "How'd it turn out that Sen. Cranston of California got nearly all the money?"
Glenn replied: "I can't answer why Alan got all the money, but I know this, when Keating, after he had made that contribution to my PAC, asked me to do things . . . I refused." Among the refused requests was one to support the appointment of Judge Daniel A. Manion, a controversial Reagan nominee to a federal appeals court, Glenn said.
McCain said that he did not know why Cranston got more money but added that he too was pressed for favors by Keating.
"Mr. Keating came to my office, basically asked me to do things on a quid pro quo basis for him. I told him I could not do such a thing and, frankly, a long relationship came to an abrupt end at that point," McCain said.