Private House Bank to Be Shut; Inquiry Slated

House leaders, scrambling to deflate a billowing scandal, moved Thursday to shut down the private bank maintained for members and to launch an ethics inquiry into the bouncing of more than 8,300 checks by at least 134 lawmakers.

The leaders, both Democrats and Republicans, also sought to contain a separate flap over unpaid restaurant debts, prodding numerous legislators and outside groups to pay off more than $300,000 in overdue tabs for meals and catering services at House facilities.

The actions came as rank-and-file House members expressed fear that a developing public furor could jeopardize their reelection chances next year as well as worsen a general erosion of public confidence in their work.

House Speaker Thomas S. Foley (D-Wash.), disclosing that he himself had written a $540 hot check for stereo equipment last December, acted with GOP leaders to push through a resolution ordering the closure of the lawmakers’ private bank, located in the Capitol, by January.

Unlike regular banks, the House institution has charged no penalty for bounced checks and, in effect, has provided no-interest loans by honoring such checks until it could collect from the offending legislator.

The resolution, adopted by a vote of 390 to 8, also instructs the House Ethics Committee to review audits by the General Accounting Office to determine if anyone “routinely and repeatedly” has written bad drafts in violation of House rules or ethical standards.

Sources said that the inquiry also might turn up evidence that lawmakers violated laws requiring them to pay income taxes on interest-free loans and to list such debts on financial disclosure statements.

In announcing the steps one week after declaring that the bank’s operations merely needed tightening, Foley resisted widespread demands to disclose the names of all check bouncers. He said that the ethics panel would make that decision.

“Naturally, I am concerned about the good reputation of the House and Congress,” Foley told reporters. “We want to see if there is any need for correction.”

Seeking to play down the seriousness of the scandal, Foley emphasized that “no taxpayer funds were involved” in covering bad checks; only the no-interest deposits of other House members were used to honor overdrafts, he noted.

He also said that “in my judgment, it is not a violation of ethical standards for members to have overdrafts or delayed (payment of) checks. The question here is whether there were significant, substantial, repeated abuses.”

Foley was asked about a Washington Times report that, according to House bank documents, more than 30 of his checking transactions either had bounced or were floated until sufficient funds could cover debits.

The Speaker said that late last December a check for $540 had been “held for 24 hours when a deposit arrived late to cover it.” Foley, a classical music buff, added with a smile that the check was for a compact disc player and a receiver purchased at a store in his hometown of Spokane.

Foley said that there were no other bounced or floated checks after July, 1989, the starting point for GAO audits. But he declined to discuss any of his transactions before then.

House Minority Whip Newt Gingrich (R-Ga.) was one of about three dozen House members who have acknowledged to reporters that they, too, had bounced checks. Gingrich said that one of his was held for insufficient funds and that he covered it within 48 hours. Another was held because it was unsigned and a third because it was post-dated, he added.

Human Events, a conservative magazine, said it had learned that liberal Rep. Peter H. Kostmayer (D-Pa.) had floated numerous checks, including one for $23,000 written to his father in 1984 that left his account overdrawn by $32,000.

Kostmayer denied the charge, saying that “the bank has determined that I had wired $29,458.50 to my account before this check was presented and that no overdraft resulted.”

He did disclose floating 19 checks worth $9,634 for from three to 17 days in 1989 and 1990. Rep. Anthony C. Beilenson (D-Los Angeles), who said he had not bounced any checks, called the scandal “really discouraging” and said that he is “dreading” having to face his constituents.