A combative Sen. Dennis DeConcini (D-Ariz.) said Wednesday that he “violated no rule and no spirit of any rule” in his dealings with savings and loan owner Charles H. Keating Jr. and he vowed not to be “terrorized by some appearance standard” in fighting for his constituents against government wrongdoing.
“I am an activist,” DeConcini told the Senate Ethics Committee, which is investigating allegations that five senators violated ethics standards by intervening with regulators on Keating’s behalf while soliciting campaign contributions from him.
“I do intervene,” DeConcini said, because the “federal government does make many mistakes.”
DeConcini, the most active participant in a key 1987 meeting between the five senators and thrift regulators, strongly denied that he was trying to negotiate a special deal for Keating’s since-failed Lincoln Savings & Loan. “I wanted to see whether the (regulators were) treating a constituent unfairly,” he said.
DeConcini said that it was appropriate for him to be aggressive in trying to determine whether federal regulators were mistreating Irvine-based Lincoln and its Arizona-based parent company, American Continental Corp., which had 2,000 employees and a $50-million payroll.
Thrift regulators have testified that DeConcini suggested during the April 9, 1987, meeting that they withdraw a rule limiting risky investments by Lincoln. At the time, the thrift had $600 million in real estate investments beyond the level permitted by the Federal Home Loan Bank Board. DeConcini suggested that, in return for easing the rule, Lincoln would make more home mortgage loans, the regulators testified.
DeConcini also proposed seeking new appraisals for properties controlled by Lincoln, because the thrift had complained that federal officials were placing too low a value on the real estate.
The regulators have characterized DeConcini’s intervention as unfair pressure, but the Arizona senator insisted Wednesday that he was only doing his job as an elected official.
“I laid out some specific things Lincoln and (American Continental) were prepared to do to work out a better relationship with the bank board,” DeConcini said.
He denied that he was negotiating for Lincoln. “We were not in position to offer a settlement agreement,” he said. “We were not in position to negotiate.”
The six members of the Ethics Committee must determine if the conduct of DeConcini and the other senators transgressed the line separating reasonable constituent service from unethical pandering to a big campaign donor.
Keating donated $1.3 million to the political campaigns and causes of DeConcini and four other senators: Alan Cranston (D-Calif.), Donald W. Riegle Jr. (D-Mich.), John McCain (R-Ariz.) and John Glenn (D-Ohio).
“Contributions have never influenced this senator to make any decisions,” said DeConcini, who received $48,000 from Keating.
Citizens have “a right to have someone stand up for them, to stick up for them. You have to have the courage to stand up to the government when it is wrong and the courage to tell constituents when you think the government is right,” DeConcini said.
“You cannot afford to be terrorized by some appearance standard,” he said, rejecting the idea that the prospect of negative publicity should deter congressional intervention.
In 1989, when a buyer was being sought for Keating’s ailing S&L;, DeConcini made several calls to regulators to inquire about the status of the sale. The regulators rejected several sales proposals because the would-be buyers appeared to be closely linked to Keating or unable to provide enough cash to help restore Lincoln to financial health.
“I wanted to do everything I could to see that (American Continental) did not go bankrupt and lose those jobs,” DeConcini told the committee.
American Continental went bankrupt in April, 1989, and the government seized control of Lincoln, which is the biggest failure among hundreds of collapsed S&Ls.; American taxpayers will spend an estimated $2 billion to pay off Lincoln depositors, whose accounts under federal insurance are protected up to $100,000.
Time after time, DeConcini rejected suggestions by committee counsel Robert S. Bennett that he might have been unduly influenced by Keating.
DeConcini, the last of four senators to undergo cross-examination, is scheduled to complete his testimony today. Cranston will not testify because he is tired from an extensive radiation treatment for advanced prostate cancer and is resting for surgery later this month.