CALIFORNIA ELECTIONS: GOVERNOR : Wilson Says Feinstein ‘Profiteered’ in S&L; Crisis

Republican gubernatorial candidate Pete Wilson charged Friday that Democrat Dianne Feinstein has “profiteered” from the savings and loan crisis through a “sweetheart deal” involving a failed Oregon thrift taken over by an investment group headed by Feinstein’s husband, Richard C. Blum.

With investment-banker Blum involved in a savings and loan deal, Wilson said it is “rank hypocrisy” for Feinstein to question the $243,334 in campaign contributions Wilson received from the troubled industry in his 1982 and 1988 U.S. Senate campaigns.

Feinstein raised the issue in a television commercial that first aired Thursday, even though she earlier said there was no evidence of wrongdoing by Wilson. Wilson said that he had never sought beneficial treatment for any savings and loan from federal regulators.

Late Friday, however, the Feinstein campaign attempted to demonstrate that Wilson had intervened on the behalf of 10 California thrift organizations. Campaign manager Bill Carrick released a sheaf of correspondence between Wilson and the Federal Home Loan Bank Board that inquired about the status of actions involving the California savings and loans. In five cases, the Wilson queries involved the granting of federal insurance for deposits in California thrifts.

“That’s an intervention,” Carrick claimed.

Wilson campaign director Otto Bos responded, “There’s been absolutely no intervention on the part of anyone.” While Bos did not have details on all 10 cases, he described them generally as requests from constituents that were passed routinely on to regulators by Wilson’s Washington office without asking for any specific action.

In one letter disclosed by the Feinstein campaign, Wilson merely asked: “I would appreciate your review of this matter to determine the appropriate assistance for my .constituent.” Wilson has always been a stickler for quick staff responses to constituent requests, Bos said.

As Feinstein has escalated the savings and loan issue, Wilson strategists have pledged to look closely at the source of the Feinstein-Blum money, $3 million of which was loaned to her campaign to get her through a tough Democratic primary election.

“Here is a woman whose campaign has been financed with the profits of her husband’s activity and it turns out that some of those profits--in fact perhaps quite a lot--have come from their ownership of a savings and loan which they purchased with very sweet tax breaks and that has been described as a remarkable sweetheart deal,” Wilson told a press conference in Long Beach.

The San Jose Mercury News reported in a story from Washington on Friday that Blum and some of his clients had received subsidies from the federal government to take over the ailing Jackson County Federal Savings & Loan of Medford, Ore. The story said that Blum and his associates took control of Jackson on Dec. 30, 1988.

The Blum group put up less than $8 million, which was matched by $23.3 million in cash from federal banking officials and a guarantee of another $35.3 million, primarily to cover questionable loans. In the year after the bailout, the thrift reported net income of $594,000 and awarded small dividends to the partners, the Mercury News said. The paper quoted Blum as saying he personally owns less than 5% of the firm that took control of the Oregon thrift.

No federal agency has found anything wrong with the Jackson County takeover and one regulator said the deal saved the taxpayers money and kept the thrift from failing.