Cranston Aide Offers Few Details of S&L; Events : Thifts: Carolyn Jordan tells the Senate ethics panel she did not know of Keating contributions when she intervened on behalf of his firm.


Carolyn D. Jordan, aide to Sen. Alan Cranston (D-Calif.), said Tuesday she knew nothing about nearly $1 million in contributions that the senator solicited from Lincoln Savings & Loan owner Charles H. Keating Jr. when she intervened on Keating’s behalf with federal regulators.

In her first public statement involving the “Keating Five” inquiry, Jordan repeatedly told the Senate Ethics Committee that she had no detailed recollection of many of the events that marked her involvement in the scandal that has ensnared her boss.

As Cranston’s representative on the Senate Banking Committee staff, she played a key role in his efforts to assist Keating in his battle with federal regulators who were investigating mismanagement at Lincoln between 1986 and 1989.

On one occasion, she recalled, she saw the California senator give Keating a brochure explaining the voter registration groups founded by Cranston. She said the senator asked Keating: “Take a look at one of my favorite projects.”


But she said she did not know until recently that Keating had made contributions of $850,000 to these groups. She added she had no personal knowledge of other contributions that Cranston obtained from Keating--$60,000 for his campaigns and $85,000 for the California Democratic Party.

Furthermore, she said she was never asked by Cranston to assist Keating as a result of the thrift executive’s unusual generosity.

In a transcript of an earlier closed-door interview with the committee, which was made public on Tuesday, Jordan said she never made a distinction between those constituents from California who had contributed to Cranston and those who had not. “There’s nobody in the damn state who hasn’t contributed to him, Republican and Democrat,” she said.

Cranston and four other senators--Dennis DeConcini (D-Ariz.), Donald W. Riegle Jr. (D-Mich.), John Glenn (D-Ohio) and John McCain (R-Ariz.)--are facing an Ethics Committee inquiry into whether they intervened improperly on behalf of Keating in exchange for contributions. The committee also wants to know if their actions delayed the government’s takeover of Lincoln, which lost $2 billion in federally insured funds.


Jordan, who has worked for Cranston since 1971, acknowledged that she contacted regulators at the Federal Home Loan Bank Board on a number of occasions at the request of Keating or his lobbyist, James Grogan. But she said she never applied any pressure on the regulators to do anything improper.

She said she only “tried to elicit information from them about what they were doing” in the course of their lengthy investigation of Lincoln.

Jordan also indicated she seldom--if ever--sought permission from Cranston before she called the bank board to express the senator’s concern about a pending matter involving Lincoln. After 20 years as an aide to Cranston, she said, she generally knew what the senator expected of her without asking.

Jordan said she never questioned Keating’s contention that he was being unfairly harassed by the regulators and made no independent inquiry into whether these claims were accurate. But she emphasized it was standard practice for Cranston’s staff to contact regulators on behalf of constituents without inquiring about the accuracy of their complaints.


She said it was not until February, 1989, that she learned from a bank board official that Lincoln might have been lying about its net worth. Until then, she was persuaded that Lincoln was one of the soundest thrifts in the industry.

Whenever Keating’s aides contacted her, Jordan said, they asked her to schedule meetings with the regulators, to urge regulators to negotiate with them or to obtain information. “Each time there was a meeting (with Keating or his staff), there was a new twist or a new problem they were having with the bank board,” she said.

In May, 1988, she said, Grogan apparently indicated to her that Keating would like members of Congress to conduct a hearing into the bank board treatment of Lincoln. She said she contacted the House Banking Committee about holding a hearing because the Senate committee did not have the time or resources to do so.

No such hearing was ever held.


Although she normally dealt with Grogan, Jordan said, she had dinner with Cranston and Keating in Los Angeles in December, 1988, when the thrift executive first indicated his desire to sell Lincoln. She also said she spent three days at the Phoenix headquarters of American Continental Corp., Lincoln’s parent company, in April, 1988, at Keating’s expense.

When Sen. Trent Lott (R-Miss.) questioned the propriety of her trip to Phoenix, she replied: “Certainly a couple of days trip is not going to cloud my judgment.”

In an affidavit released on Tuesday, Kenneth A. McLean, the former staff director of the Senate Banking Committee, said Cranston and Jordan were active within the Senate to aid Lincoln in its bitter dispute with regulators.

When then-Sen. William Proxmire (D-Wis.) offered an amendment in 1987 that would have reasserted the authority of federal regulators to limit direct investments by state-chartered thrifts, such as Lincoln, Cranston told McLean that he opposed the amendment. Jordan also contacted McLean several times on the issue, according to his affidavit.


The amendment later was dropped by Proxmire.

“Although I was unaware in late March, 1987, of the political contributions Sen. Cranston had received from Mr. Keating, it occurred to me at the time that deleting the amendment, as advocated by Sen. Cranston, would benefit Lincoln,” McLean said.

Jordan, rebutting McLean’s comments, said he had a reputation for “chicanery.”

McLean also said that Cranston and Jordan were advocates for the 1986 appointment of Lee Henkel, a Keating ally, to the three-member bank board.


Proxmire, the Banking Committee chairman, opposed Henkel’s appointment because the nominee operated companies that had $55 million to $60 million in loans from Lincoln.

When Congress failed to act on the nomination, Henkel got a recess appointment after Congress adjourned for the year. He then immediately proposed that the bank board modify the investment rule in a way that would have helped Lincoln.

A worried Proxmire promptly ordered an investigation of Henkel. The committee investigator, Bart Naylor, learned that Lincoln had bought stock, of uncertain value, from one of Henkel’s companies.

Naylor contends that Jordan tried to thwart his investigation. When asked about it, Jordan said she had no recollection of talking to Naylor about Henkel.


Henkel later resigned from the bank board after the Justice Department began an inquiry into his activities.