S&L; Chief Quits Under Fire : Danny Wall Says He Is Scapegoat

M. Danny Wall resigned today as the government’s chief regulator of savings and loans, saying he was made a “scapegoat to shoulder the blame for the entire thrift crisis” and the record bailout of the Lincoln Savings & Loan Assn.

As he has done before, Wall insisted at a packed news conference and in his resignation letter to President Bush that he did nothing wrong and leaves with “personal integrity that will stand up to any scrutiny.” But he said the fact that he was the “primary target” of a congressional investigation would create a hardship at the Office of Thrift Supervision, which he directed.

Wall complained about a “steady stream of one-sided information emanating from the House Banking Committee hearings concerning my handling of Lincoln Savings & Loan.”

He specifically cited Rep. Henry B. Gonzalez (D-Tex.), chairman of the House Banking Committee, whom he accused of resorting to “corruption of the truth and abandonment of our historical devotion to fair play and due process in his effort to remove me from office,”

Gonzalez said Wall has “done the best thing for himself and the federal regulatory system. . . . The savings and loan disaster has been extremely costly in terms of dollars and public confidence. It was essential that there be new leadership.”

For nearly two months, Wall has been the chief target of hearings by the House Banking Committee into why federal regulators allowed Lincoln to remain open until last April even though examiners had recommended in May, 1987, that it be closed. The bailout of the Irvine, Calif., institution is expected to cost taxpayers up to $2.5 billion.

Wall has maintained there was not enough evidence to seize Lincoln and has dismissed allegations that he declined to act because of political pressure from five senators who intervened on behalf of Lincoln and Charles H. Keating Jr., chairman of Lincoln’s parent company, American Continental Corp.

The Senate Ethics Committee is reviewing the conduct of the five senators, among them Sen. Alan Cranston (D-Calif.).

“As I testified under oath, neither political influence nor Lincoln’s Charles Keating affected my decision on Lincoln,” Wall said in his resignation letter. “Nor for that matter have I ever made decisions for political reasons during my tenure as chairman and director.”

Keating faces a federal grand jury investigation in Los Angeles and he is the target of a $1.1-billion fraud and racketeering suit brought by federal regulators.

Wall said, “The simplistic efforts to find a scapegoat to shoulder the blame for the entire thrift crisis led various critics to join in the hue and cry raised by the House Banking Committee chairman for my departure from office.”

Wall testified for 10 hours before Gonzalez’s committee in late November. Following Wall’s appearance, Gonzalez said of his testimony, “Somehow it rings very hollow to say the huge regulatory bureaucracy could do nothing, did nothing, as the institution (Lincoln) went down.”

Wall was chairman of the Federal Home Loan Bank Board from July, 1987, until last August, when its function as the federal regulator of the savings and loan industry was transferred to the new Office of Thrift Supervision.