Congressmen’s Bad Checks Create Political Liabilities : Ethics: Reports of abuse of the private bank maintained for House members generates a public outcry only a year before crucial elections.

Rep. Jim Nussle stood in the ornate House chamber earlier this year explaining how the federal budget process works to a group of wide-eyed high school seniors who had been chosen as the nation’s young leaders of tomorrow.

“I told them it is very simple,” recalled Nussle (R-Iowa), the youngest member of Congress at 31. “It is like balancing your checkbook. If you have $35 in your checkbook, you do not spend $40.”

For some lawmakers, though, it turns out that Nussle’s lesson--like the $3-trillion federal debt--isn’t so easily mastered.

To the chagrin of many congressmen, what began two weeks ago as a minor flap over check-bouncing practices by House members has spread from Capitol Hill to their home turf. The public furor, fueled by radio talk show hosts nationwide, shows signs of developing into a political liability similar to that generated by past congressional pay raises. And it comes at the worst possible time--only a year before a 1992 election in which all incumbents will have to run in newly drawn districts after reapportionment.

While many Americans may have difficulty grasping the complex nature of international banking scandals and savings and loan failures, they understand the significance of congressmen repeatedly writing bad checks without paying a penny in bank fees or penalties.

Indeed, several California congressmen said that they have been hearing from constituents demanding to know whether they have bounced checks through the private bank maintained for members of the House of Representatives. The public outcry was prompted by a government audit showing that House members bounced 8,331 checks worth hundreds of thousands of dollars between July, 1989, and June, 1990.

“It’s outrageous that the members did this,” said Rep. Don Edwards (D-San Jose), dean of the California Democratic congressional delegation. “I perfectly understand the anger of people back home.”

Ever since the audit findings were released publicly, congressmen representing districts across the country have been scurrying to obtain official letters from the House bank stating that they did not write any bad checks during the period in question.

A separate Times survey of California’s 45 House members found only two--Reps. Dana Rohrabacher (R-Long Beach) and Richard H. Lehman (D-Sanger)--who acknowledged having bounced checks at the House bank. Rep. Henry A. Waxman (D-Los Angeles) refused to discuss his personal banking practices; several others declined to return phone calls.

Rohrabacher, who represents northwestern Orange County, said that he overdrew his House bank account on one occasion, about a year ago.

“I remember (a bank official) called me and said I was $50 or $60 light, and they were holding it,” Rohrabacher said. “Frankly, I called home . . . and my parents wired in the money the next day and covered it.”

Rohrabacher said that the check was written in connection with his purchase of a townhouse in Arlington, Va.

“I had all these different fees I was paying; you have your termite inspection and all that, and this might have been just a $100 check,” Rohrabacher said.

A spokesman for Lehman said that the congressman wrote a bad check in 1989 for less than $200 for “anything from groceries to who knows what.” Lehman “took care of it immediately” when he received a notice from the bank, the spokesman said.

Both Lehman and Rohrabacher said that they did not bounce any checks during the 12-month period covered by the government audit.

The study by the General Accounting Office, the investigative arm of Congress, found that 134 members had written 581 hot checks of $1,000 or more, and 24 members bounced at least $1,000 in checks during each of the first six months of 1990. Moreover, 4,325 hot checks were written after House Speaker Thomas Foley (D-Wash.) first attempted to put a stop to the practice last year in response to similar findings by the GAO.

The bank, located in the Capitol building near the House floor, is a convenient place for members to cash personal checks. It is a private operation subject only to regulations set by the House. Since most members deposit their paychecks directly into the bank, the shortfalls apparently have been covered with funds taken from the accounts of other lawmakers. No public money was lost as a result of the overdrafts.

The hot check policy at the House bank contrasts sharply with practices at commercial banks. Checking customers at Security Pacific Bank in Los Angeles, for instance, typically pay a $10 fee for each bounced check. Repeat offenders are reported to credit bureaus and risk losing their accounts, said a Security Pacific official. Many firms that receive bad checks also levy a penalty.

In response to the check-bouncing controversy, seven reform-minded Republican freshmen--including California Reps. Frank Riggs (R-Windsor) and John T. Doolittle (R-Rockland)--are pressuring Foley to disclose the names of legislators who bounced checks as well as the amounts and circumstances involved.

“We’ve just got to come clean on this or we’re going to become the laughing stock of every kitchen table in the country,” said freshman Rep. Scott L. Klug (R-Wis.).

So far, Foley has refused to divulge the names, saying that House members are entitled to the same confidentiality regarding their personal financial transactions as other citizens. The Speaker has vowed that he has cracked down on the bank operation for good, threatening to fire any House bank employee who covers a bad check for a congressman.

“In the future, we won’t have the problem,” Foley said.

Because of the bank controversy, other privileges abused by House members also are coming under scrutiny. A congressman who oversees the House restaurant operation disclosed this week that about 300 current and former members owe more than $300,000 in unpaid bills.

Rep. Pat Roberts (R-Kan.), ranking Republican on the House Administration subcommittee on personnel and police, said that he wants to publicly identify the deadbeats if they do not pay up soon.

“There’s no free lunch,” Roberts told the Associated Press Wednesday. “Members of Congress should pay their bills or face the consequences.”

Potentially more damaging to Congress is the possibility that a few members may have systematically abused the House bank’s loose check-cashing policy. During the last week, lawmakers have heard unconfirmed reports that some members took advantage of a four-week float period to cover their checks.

“What most disturbs me is the clear evidence that a significant number of members were routinely abusing this privilege by basically turning it into a monthly pay advance,” Riggs said.

Many congressmen contacted by The Times were reluctant to be quoted for this story.

The brewing scandal, which some have dubbed “Rubbergate,” contributes to the image of a House of Representatives that “gives itself pay raises without any accountability on balancing the budget,” said Rep. Robert K. Dornan (R-Garden Grove).

Dornan’s outrage is shared by other Congress-watchers.

“It’s just one more nail in the coffin of the institution in terms of being unresponsive to real constituent concerns,” said Ellen Miller, executive director of the Center for Responsive Politics. “. . . In the real world, everyone has to worry about how much money they have in their checking accounts, if they have a checking account.”

Times Staff Writers Robert W. Stewart and Janine DeFao contributed to this story.