Danny Wall Facing a Senate Subpoena : Former Regulator Will Be Called in Texas S&L; Probe
The chairman of a Senate panel said today it will subpoena former top thrift regulator M. Danny Wall and a former aide to President Bush to explain how an Arizona man could buy 15 failing Texas savings and loans by putting up only $1,000 of his own money.
“I expect each of them. . . . They owe the public an explanation,” said Sen. Howard M. Metzenbaum (D-Ohio), chairman of the Senate subcommittee on antitrust, monopolies and business rights.
Among those to be subpoenaed within a week, Metzenbaum said, are Wall, former chairman of the Federal Home Loan Bank Board; insurance executive James M. Fail of Phoenix, and Robert J. Thompson, a lobbyist and former congressional liaison for Bush when he was vice president.
Metzenbaum’s panel is investigating a federally approved deal in December, 1988, in which Fail was promised $1.8 billion in subsidies while putting up only $1,000 of his own money and borrowing $70 million to buy 15 S & Ls consolidated into the Dallas-based Bluebonnet Savings.
Metzenbaum said Wall, Fail and Thompson refused to appear voluntarily before his panel.
Thompson, according to Metzenbaum’s investigators, pushed for approval of the Fail deal and in 1989 borrowed more than $500,000 from companies controlled by Fail.
Metzenbaum said federal payments amounting to $23 million a month helped Bluebonnet become the nation’s most profitable large savings and loan last year.
Wall told the New York Times: “I did nothing for Bob Thompson that I didn’t do for anyone else. There is nothing nefarious about it.”
Investigators said Fail was allowed to acquire the institutions even though a company he controlled pleaded guilty to fraud in Alabama in 1976. Fail was indicted for securities fraud in that case, but the charges against him were dropped and he agreed not to conduct any new business in the state.
The congressional panel is trying to determine why the bidding process for the failed S & Ls was concluded quickly, why some federal bank board officials who raised questions about Fail were overruled and what role was played by Thompson.
“The political implications of this deal need a lot of explaining,” Metzenbaum said Sunday. “It appears from this particular instance the negotiators did not do their job very well.”
George M. Barclay, president of the Federal Home Loan Bank in Dallas, acknowledged in a telephone interview Sunday that he wrote a letter overruling staff objections to Fail’s eligibility for the deal. The letter to federal regulators was necessary for Fail’s approval as a buyer.
He said he could not recall why he came to that conclusion but acknowledged that he may have acted in response to telephone calls from officials in Washington. But he said that “it’s absolutely not true that anybody attempted to influence me” and that the letter raised a flag for regulators by mentioning Fail’s past indictment.
He said the bank only certified to federal regulators “that we felt based upon the information we had that we had no objection, no legal objection, to his acquiring the institution” and that the bank would be able to properly regulate Fail’s new institution.
