News Analysis : Wilson’s Letters on Behalf of Thrifts Become a Campaign Issue : Politics: Many legislators who wrote regulators to help S&Ls; are now being haunted by their actions.

Just a few years ago, Sen. Pete Wilson’s efforts to assist California savings and loan executives amounted to business as usual in Washington. Like Wilson, many members of Congress routinely wrote letters to federal regulators on behalf of home state thrifts.

But times have changed and earlier standards of conduct for members of Congress are now being called into question.

Across the country, incumbent members of Congress are being forced by their political opponents to defend actions--no matter how small--that might have contributed to the crisis in the nation’s savings and loan industry.

In fact, the political pressures caused by the thrift debacle have grown so intense that many politicians--including some of Wilson’s colleagues in the Senate--have returned hundreds of thousands of dollars in campaign contributions received from savings and loans. This group includes some members who have never been directly linked to the thrift scandal.

“Until recently, the only candidates who got into trouble on this issue were those who took specific actions on behalf of savings and loan crooks,” said Anita Dunn, an official of the Democratic Senate Campaign Committee. “But now many incumbents are being asked: What were you doing while this was going on? Why didn’t anybody stop it?”

Wilson, who received more than $243,000 in contributions from S&L; executives over the last 10 years, is being accused by Dianne Feinstein, his Democratic opponent for governor, of repeatedly contacting federal regulators during the mid-1980s on behalf of newly chartered California thrifts that were having trouble getting federal deposit insurance.

The charges are supported by government records obtained from the Office of Thrift Supervision. The documents also show that Wilson contacted federal regulators on behalf of other thrifts, including one that has given him more than $20,000 in campaign contributions, and four that were seized by federal regulators.

Wilson has said that he did not pressure federal regulators on behalf of the thrift industry. According to his aides, Wilson considered his contacts with federal regulators to be routine constituent service.

Otto Bos, Wilson’s campaign manager, said the senator was only inquiring about the complaints he had received from thrift executives and that he made no effort to force federal regulators to change their policies.

But Bill Carrick, Feinstein’s spokesman, said the records demonstrate Wilson was “taking an advocacy and lobbying position” on behalf of the thrifts.

At the time, Wilson’s letters to the Federal Home Loan Bank Board were remarkable only because the GOP senator--unlike most members of Congress who wrote to the agency--does not serve on the Senate Banking, Housing and Urban Affairs Committee, which oversees the thrift industry.

Most of Wilson’s letters to thrift regulators were pro forma requests for an explanation of the complaints his office had received from executives of state-chartered savings and loans that were having trouble getting federal deposit insurance.

Edwin J. Gray, who headed the Federal Home Loan Bank Board during the mid-1980s, recalls that his agency routinely received letters from members of Congress who were passing along such complaints. The agency, now known as the Office of Thrift Supervision, still has two massive file cabinets full of such letters dating back to the early 1980s.

But one of Wilson’s letters clearly deviated from that pattern. Unlike the other letters, it questioned the agency’s general policy and did not mention any single thrift. Writing to Gray on Oct. 25, 1984, Wilson said that he shared concerns expressed by other members of Congress about the difficulty California-chartered thrifts were encountering when they applied for federal deposit insurance.

At the time of Wilson’s letter, the regulators were observing what one official described as a de facto moratorium on issuing federal deposit insurance for state-chartered thrifts in California. The moratorium had been imposed by Gray, who feared that Lawrence Taggart, then California’s savings and loan commissioner, was chartering too many new thrifts and thus jeopardizing the federal deposit insurance system.

During one 400-day period, Taggart had approved 200 applications for state charters.

In his letter, Wilson asked Gray whether he could set up a meeting between state and federal regulators to iron out the problem. He also inquired whether legislation was needed to improve the oversight process.

Although Gray remembers none of Wilson’s other inquiries, he said that he recalls receiving the Oct. 25 letter. “My recollection was that I just firmly disagreed with him,” said Gray, who explained his position in a cordial letter to Wilson on Nov. 2.

According to Gray, Wilson never pursued the complaint. “I never got a call--never heard from him,” Gray said. “There was no intervention.”

Gray said that Wilson’s action is not comparable to efforts by Sen. Alan Cranston (D-Calif.) and four other senators on behalf of Charles H. Keating Jr., owner of failed Lincoln Savings & Loan of Irvine. Gray has accused the five senators of improperly trying to influence thrift regulators by summoning them to Capitol Hill for a meeting about a lengthy government investigation of Lincoln.

But Cranston, like Wilson, argues that his efforts on behalf of Keating were nothing more than legitimate constituent service. In addition, Cranston, who serves on the Senate Banking Committee, has accused Gray of partisanship in criticizing the thrift-related activities of Democrats in Congress while dismissing the conduct of Republicans.

Like Wilson, Gray is a San Diego Republican. Before he took over the agency that regulates savings and loans, he served as a close adviser to Ronald Reagan, both during his tenure as governor and during the early years of his presidency.

The rush to obtain state thrift charters followed a wave of deregulation at the state and federal levels that permitted S&L; executives to invest large sums of federally insured money in risky business ventures. These changes are at the heart of the current crisis, which ultimately could cost taxpayers as much as $500 billion.

Records show that Wilson wrote to Federal Home Loan Bank Board officials on eight occasions between October, 1983, and August, 1985, asking the agency to review denials of federal insurance to specific state-chartered thrifts.

The institutions included City Savings & Loan of Westlake Village, Builders Savings & Loan of Long Beach, Diamond Savings of Westminster, Shelter Island Savings of La Jolla, Great Fortune Savings of Los Angeles, Bay Savings & Loan of Monterey and Alta Savings of Concord.

At least two of the institutions--Alta and Bay--already had been denied federal insurance and could not operate.

Most of the thrifts that Wilson tried to assist did not contribute to his campaign, according to Federal Election Commission records. He did, however, receive a $500 contribution from an executive of City Savings & Loan in 1988--four years after he intervened on behalf of the thrift’s application for federal insurance.

Wilson also wrote to federal regulators on April 10, 1984, on behalf of Great Western Savings & Loan, which has contributed generously to his campaign. He forwarded a Great Western letter--which complained that the thrift was not receiving enough interest on a loan for real estate that the federal government seized in connection with illegal drug trafficking.

Federal Election Commission records show that he has received more than $20,000 from Great Western’s political action committee over the last decade--$4,300 in 1982, $2,500 in 1984, $4,000 in 1985, $6,000 in 1986 and $4,000 in 1987. The 1987 contributions were earmarked for Wilson’s 1994 Senate reelection campaign. In addition, he has received at least $6,500 in personal contributions from Great Western executives during the same period.

Wilson’s letters to the bank board included three on behalf of thrift executives whose institutions already had been seized by the federal government--Hacienda Savings & Loan of Oxnard, San Marino Savings & Loan of San Marino and Mt. Whitney Savings & Loan of Visalia.

In addition, he contacted the agency last April on behalf of Santa Barbara Savings, which subsequently was seized by the government. In this letter, he passed along a complaint that federal regulators had rejected the thrift’s reorganization plan.

Wilson has no plans to return any of his campaign contributions from savings and loan executives. To do so, his aides have said, would be an admission that he did something out of the ordinary.

Times staff writer Bill Stall in Los Angeles contributed to this story.