Riegle to Give Up All S&L; Donations : Thrifts: Senator to give Treasury a check for $120,000. He is among 5 lawmakers linked to head of failed Lincoln Savings.

In a sign of the growing political sensitivity of the savings and loan crisis, Senate Banking Committee Chairman Donald W. Riegle Jr. (D-Mich.) said Thursday that he will give the U.S. Treasury $120,000--the amount he received in contributions from the S&L; industry over the last seven years.

The travail of the thrift industry “casts a shadow across any campaign contributions from that industry,” said Riegle, even though the contributions were legal. He and four other senators, including Alan Cranston (D-Calif.), are under investigation by the Senate Ethics Committee for intervening with S&L; regulators on behalf of thrift mogul Charles H. Keating Jr.

Riegle already had returned $78,000 linked to Keating and his business associates. But the banking chairman went much further Thursday, disposing of all the funds he received from all S&L; political action committees and individuals connected with 30 thrifts.

Riegle is dipping into his campaign treasury, which contains $780,000, to write the $120,000 check to the U.S. Treasury.

Meanwhile, renewing earlier warnings, federal officials said Thursday that they will run out of money in October to pay for shutting down crippled S&Ls;, putting pressure on a deficit-conscious Congress to provide additional funds to deal with the massive thrift collapse.

The government will be forced to “significantly and dramatically reduce the pace” of closing insolvent S&Ls; unless Congress provides more funds, said Peter Monroe, president of the Oversight Board of the Resolution Trust Corporation.

The funds are used to pay off depositors, whose accounts are insured by the federal government for as much as $100,000. The government will simply delay the shutdowns of crippled S&Ls; until it has enough money to finance the closings, but that will probably add to the eventual cost. Although he is giving the $120,000 to the Treasury, Riegle said that he does not think there was a conflict of interest in taking the S&L; money. Although all the contributions “were legal, proper and publicly recorded--the extraordinary nature of the S&L; industry’s problems is sufficient to warrant their return, and my campaign will forward such an amount to the U.S. Treasury,” Riegle said.

The S&L; funds have accounted for 2% of total campaign contributions to Riegle since 1983.

Riegle is one of the “Keating Five,” a group of senators who met with thrift regulators on behalf of Charles Keating, former owner of defunct Lincoln Savings & Loan of Irvine, Calif., after accepting contributions from him. The collapse of Lincoln is expected to cost taxpayers $2 billion.

Last year, Sen. Dennis DeConcini (D-Ariz.)--one of the five--returned to the contributors about $47,000 that Keating had raised for him. None of the others--Cranston, John Glenn (D-Ohio), and John McCain (R-Ariz.)--have returned any S&L; campaign contributions.

Murray Flander, Cranston’s spokesman, said that the senator decided against making a similar gesture because: “The money is all gone. We received it in good faith. We don’t do criminal checks on every contributor.”

Flander hinted that Cranston might reconsider his decision. “ . . . We really haven’t had a chance to discuss it recently,” he said.

According to Common Cause, Cranston has received $143,700 from thrift contributors over the last decade. Sen. Pete Wilson (R-Calif.) got $243,334.

Edward Rollins, co-chairman of the Republican Congressional Campaign Committee, has recommended that all Republicans and Democrats who took S&L; contributions “throw it into the Treasury.”

The Democratic National Committee said Thursday that it has returned a $5,000 contribution to an unidentified person involved in the savings and loan scandal because it had the “appearance of illegality,” according to spokesman Ginny Terzanno.

She said that the committee does not intend to return all of the contributions it received from borrowers or officers of failed thrifts and that the decision to return some S&L; money applies only to contributions received since February, 1989, when Ron Brown took over as Democratic chairman.

Nor are Democratic Party leaders recommending this policy to other Democratic fund-raising groups. At the Democratic Senatorial Campaign Committee, spokesman Anita Dunn said that the policy is to return contributions from persons who are actually convicted of fraud.

Gary Koops, spokesman for the National Republican Congressional Campaign Committee, said his organization has received no money from thrifts now insolvent or involved in fraud.

In a related development, House members from the Northeast and Midwest, bringing a scent of regional warfare to the S&L; issue, renewed their attack against California and Texas. The legislators said that state-chartered S&Ls; in California and Texas should pay an extra insurance premium to remain eligible for the federal insurance that protects deposits up to $100,000.

Staff writer Sara Fritz contributed to this story.