No Citizens Above Suspicion, Please
The questions raised concerning the way in which federal regulators treated President Bush’s son Neil during their investigation of his conduct as a director of the failed Silverado Banking Savings & Loan Assn. differ in degree, though not in kind, from those that must be answered if the thrift debacle ever is to be resolved satisfactorily.
The American financial system has suffered nothing like the collapse of the savings and loan industry since the Depression. That it has occurred without triggering panic is testimony to the wisdom of the federal deposit insurance programs adopted in the wake of that last great economic upheaval. However, confidence has its price and, in this case, it may reach a staggering half a trillion dollars in public liability.
The American people, whose taxes will have to cover that debt, deserve clear answers to two questions: How did deregulation go so badly awry that the thrift industry was turned from a reliable source of home mortgages into a kind of floating crap game? Does the federal government have the will to pursue those individuals who took this catastrophic failure of public policy as an opportunity to behave irresponsibly or criminally, even though many of them are wealthy and politically influential?
The issues raised in Neil Bush’s case speak directly to the latter question. Much about the Silverado failure--whose cost to taxpayers will exceed $1 billion--is curious. In October, 1988, when Colorado state officials moved to close down the insolvent institution for which the younger Bush had served as an outside director for three years, regional federal regulators--acting on instructions from Washington--intervened. They kept Silverado open until Nov. 9, the day after George Bush won election. Earlier this year, the enforcement staff of the Office of Thrift Supervision recommended that Neil Bush be banned from the industry because he had engaged in “personal dishonesty” and had “willfully breached” his fiduciary duties while serving as a Silverado director. Four of the institution’s executives subsequently signed consent orders accepting such a prohibition. However, federal regulators, citing the lack of evidence against Bush, sought a lesser penalty for him--a cease-and-desist order directing that he refrain from violating disclosure rules. Neil Bush denies any wrongdoing and is contesting even that order.
All of this may reflect nothing more than the normal coincidence and uncertainty that are part of any complex investigation. It also is possible that it reflects the official favoritism, influence-peddling and insider arrogance that have been part of the thrift problem from the beginning. That is an ambiguity every bit as intolerable as the S&L; crisis itself.
