S&L; Regulator Nominee Used Drugs in ‘70s

Hours after his nomination as the nation’s top savings and loan regulator was narrowly approved by the Senate Banking Committee, T. Timothy Ryan Jr. publicly admitted that he had used marijuana and cocaine in the 1970s.

Ryan had earlier disclosed his past drug use to the FBI, and the Bush Administration said Banking Committee members had been aware of that disclosure during their review of his nomination.

After Ryan’s past drug use was made public, the Administration immediately reaffirmed its strong support for him to head the Office of Thrift Supervision, which regulates the nation’s beleaguered trillion-dollar S&L; industry.

“Prior to my nomination, I disclosed both on my FBI forms and verbally to the White House, Treasury and the FBI that, early in the 1970s, I smoked marijuana on a few occasions and tried cocaine once, perhaps twice,” Ryan said in a statement issued late Friday. Ryan, now 44, apparently was in his mid-20s when his drug use occurred.

“I regret this mistake,” Ryan said. “I do not regret having voluntarily disclosed this information.”

Ryan’s statement was issued after NBC News broadcast a story concerning his admission of drug use, citing unnamed senators as the source of the information.

Treasury Secretary Nicholas F. Brady, who drafted Ryan for the thrift regulator’s job, issued a strong defense of his nominee.

“It’s a sad day when information from confidential FBI reports is leaked,” Brady said in a statement.

“Before Timothy Ryan’s nomination, the White House and the Treasury Department were made fully aware of the facts in the FBI report. Now, a majority of the Senate Banking Committee has recommended his confirmation in full knowledge of these same facts.”

The admission of drug use should not “deter the full Senate from acting promptly and favorably on Mr. Ryan’s recommendation,” Brady said.

Sen. Donald W. Riegle Jr. (D-Mich.), Banking Committee chairman, who led the unsuccessful opposition in Friday’s vote, said: “FBI files should be treated with the strictest confidentiality. I will not comment on any nominee’s file. I consider any disclosures from such files to be highly improper. The Banking Committee has acted upon the Ryan nomination and the matter is now before the Senate for its decision.”

Ryan’s case is likely to raise again the issue of whether previous drug use is acceptable for public officials, particularly among individuals now in their 30s and 40s who are more likely to have experimented with marijuana or other substances during the turbulent 1960s and early 1970s.

Ryan’s situation is reminiscent of that of Supreme Court nominee Douglas H. Ginsburg in 1987. After disclosures that he had smoked marijuana when he was a student teacher at Harvard Law School, Ginsburg withdrew his nomination.

Sen. Albert Gore Jr. (D-Tenn.) and former Arizona Gov. Bruce Babbitt, when candidates for the 1988 Democratic presidential nomination, both admitted to past marijuana use. In California, Common Cause’s former executive director, Walter Zelman, a candidate in the Democratic primary for state insurance commissioner, recently admitted to a conviction for marijuana possession.

The public disclosure of Ryan’s admissions will add a new burden to an already tough struggle for confirmation by the full Senate. He faces serious questions about his lack of financial experience.

After intense personal lobbying on his behalf by Brady, two Democrats joined the committee’s Republicans to prevail in an 11-10 vote for Ryan, a pension lawyer with no experience in the finance business.

The full Senate will vote Wednesday on whether to confirm Ryan.

Ryan’s victory was an unexpected rebuff to Riegle, the committee chairman. “In a nation of 240 million people,” it is “beyond comprehension” that the Administration cannot find someone more qualified, Riegle said before the vote. Ryan, a former Labor Department official, was counsel to the 1988 Bush presidential campaign.

The White House wants Ryan installed before April 11, when a federal appeals court will consider whether the Office of Thrift Supervision is operating illegally because its first director, M. Danny Wall, was never confirmed by the Senate. A lower court has blocked the agency from seizing an S&L;, citing the lack of Senate confirmation.

The Office of Thrift Supervision has authorized the government seizure of more than 150 S&Ls; and has set tough capital standards for thrift institutions in accordance with overhaul legislation enacted last year. The official confirmation of a director would remove legal uncertainties about the agency’s authority.

Administration officials acknowledge that Ryan is a novice in the complex field of banking and finance but say that no experienced candidate is available. White House Press Secretary Marlin Fitzwater said Friday: “We want somebody who can handle the law and is pretty tough and can go in there and straighten out the problems of this industry.

“If this were an easy job, we would have people lining up at the door to get it,” Fitzwater said. “And, believe me, there are not people lining up at the door to get it.”

Sen. Jake Garn (R-Utah) said that those experienced in finance would be deterred by a rule that prohibits a person holding such a federal post from taking a job in a related industry for two years after leaving government.

“We may reach the point where Mother Teresa is the only one confirmed for a government post or some Ralph Nader neuter who has never experienced anything,” Garn said.

But Democrats were not persuaded, and they repeatedly complained during the debate about Ryan’s credentials.

The collapse of hundreds of S&Ls; into insolvency has produced “the most costly financial debacle in American history,” raising important questions about the role of an independent thrift industry and federal deposit insurance, but Ryan “does not seem to have given these issues any real thought,” Sen. Alan Cranston (D-Calif.) said.

Ryan has “no experience and no knowledge of what he’s getting into,” said Sen. Timothy E. Wirth (D-Colo.).

In his lobbying effort, Brady was persuasive with other Democrats. Sen. Terry Sanford (D-N. C.) cast his vote for Ryan by proxy. Sen. Richard C. Shelby (D-Ala.) spoke briefly during the committee session, praising Ryan as an “intelligent generalist” with a “good educational background.”

“I’m going to be thinking about it . . . it’s probably a matter the whole Senate should take up,” Shelby said, remaining silent through the rest of the discussion until the final vote, when he supported Ryan.