Check Kiting Affair May Drive Some From Office

Wags are calling it “Rubbergate.” But the joke does not begin to describe what could become a politically fatal scandal for members of the U.S. Congress who are about to be exposed as check kiters.

Coming in an election year when the word “incumbent” already has a negative ring to it, it is a scandal that political analysts say could drive some congressmen from office.

“The mood around here? Abject terror!” said Rep. Fred Grandy (R-Iowa), a member of the House Ethics Committee.

The source of the terror is an Ethics Committee investigation, the results of which are about to be made public, showing that scores of congressmen repeatedly kited tens of thousands of dollars of bad checks on the little-known House of Representatives bank.

To be sure, no one appears to have broken any laws. But the preferential treatment--and sometimes abuse of it--shown members of Congress has enraged an American public that is struggling to survive in troubled economic times.

If the findings prove as explosive as now seems likely, the scandal could be at least as damaging as any to have swept the Congress so far.

“Everybody is talking about it,” added a House leadership aide. “Everybody wants to know who’s on ‘The List.’ ”

The List is the roster compiled by the Ethics Committee of the 24 worst check bouncers--19 current members and five former members--who together ran overdrafts of at least $899,000 during the 39-month period under study by the committee.

The House is expected to adopt a committee recommendation Friday to disclose the names of the 24--a move deemed likely to end some of their political careers. But a major political battle is brewing over whether the disclosures should end there--or be expanded to include scores of other congressmen who also bounced checks at the now defunct bank with varying degrees of regularity.

While Democrats and Republicans are both divided, some believe that the information is bound to come out and that the best option is to come clean now to avoid what otherwise are certain to be allegations of a cover-up.

“It’s like we’re sitting on the San Andreas fault waiting for the Big One,” one aide to a Republican House leader said. “The question is not whether this is going to explode, but when.”

As measured by the standards of wrongdoing established by memorable scandals of the recent past--Watergate, Abscam and the “Keating Five” debacle--”Rubbergate” did not at first appear to be the kind of political earthquake that could shake the halls of Congress to their very foundations.

While a few members clearly had abused the privilege, the practice of overdrawing accounts at the House bank was so old and so widespread that it became regarded by most members as one of the accepted perks of their position.

Bank officials routinely extended the privilege to members without penalty and did not even bother to notify them of their overdrafts unless they exceeded an amount equal to one month’s net salary.

That was considered acceptable because the House bank did not operate like a bank in the usual sense. Instead, it was more like a financial convenience store where members could deposit their salaries, cash checks and even overdraw their accounts as long as they made up the deficit when their next paychecks were deposited.

Because the bank paid no interest and used the money deposited by other members to cover the overdrafts, no public funds were ever involved and no money was ultimately lost.

Indeed, so “routine” was the practice of honoring overdrafts that many members thought they were simply drawing advances against their paychecks, not kiting checks, the Ethics Committee said in its report. So slipshod was the bank’s record-keeping, the report added, that other members who may have inadvertently written the occasional bad check were never informed of the fact.

But, as the report also noted, “times have changed.” Coming on top of previous scandals and during an election year when anti-incumbent fever has reached epidemic proportions among voters, the initial disclosures about the check kiting affair landed in members’ home districts “like a blitzkrieg of stink bombs,” one leadership aide said.

As scandals go, “the substance of this one is trivial, but the political impact is big,” said Thomas Mann, an expert on congressional affairs at the Brookings Institution in Washington. “We’re talking about victimless events and sloppy banking procedures going back for nearly a century. . . . But this has been blown up all out of proportion because to average folks it looks really bad. Congress is in such ill repute as it is, and this only adds to it.”

The first disclosures came in a report by the General Accounting Office, the watchdog arm of Congress, last September. Smelling the political peril, the House moved swiftly to contain the damage, voting in October to close the bank and authorize an investigation by the Ethics Committee, formally known as the Committee on Standards of Official Conduct.

After five months of secretive deliberations, the committee has released its preliminary findings and the result is more embarrassing than the House leadership evidently anticipated it would be.

Of the 268 Democrats and 166 Republicans in the House, only “70 to 80 are clean Marines” who never wrote a rubber check at the House bank, said the committee’s vice chairman, Rep. James V. Hansen (R-Utah).

In the 39-month period examined by the committee, 355 current members and former members wrote nearly 20,000 bad checks and, while the majority of them were only small overdrafts, the worst 24 abusers had overdrafts exceeding one month’s net pay in at least eight of the 39 months in which their account balances were scrutinized by the committee.

The worst offender exceeded that limit in 35 of the 39 months under study and wrote a total of 996 bad checks during that period--an average of more than 25 per month.

“If this is not the Mother of all Congressional Scandals, if there’s one waiting out there that’s worse, then I want off the Ethics Committee right now,” said Grandy, who predicts that the scandal will taint all congressional officeholders, regardless of their check-writing records, with “the stain of incumbency” before the November elections.

“It throws a real wild card into the election,” Mann agreed. “There is a lot of discontent and anti-incumbent sentiment out there and this is another explosive in the mix.”

While other experts doubt the scandal will be that bad, the extent of the damage--and the number of members who could lose their jobs--is likely to depend, in part, on the outcome of a political battle shaping up between the Democratic leadership and a group of renegade Republicans who are challenging the Ethics Committee’s 10-4 recommendation to release only the names of the 24 worst abusers.

Acting committee Chairman Matthew F. McHugh (D-N.Y.) acknowledged that the standards used to identify the 24 members who “repeatedly and routinely” abused their check-cashing privileges by “significant” amounts were “fairly subjective.”

But he and other members said there was a need to separate the “obvious abusers” from members who thought they were doing nothing wrong in availing themselves of an overdraft privilege in wide use since 1951.

However, a small group of lawmakers, led by Rep. Jerry Lewis (R-Redlands), the third ranking GOP leader in the House, is pressing for disclosure of the names of all the check bouncers on the grounds that anything less than that will smack of a cover-up that will only deepen the political damage.

“Drawing the line at 24 is not acceptable, especially when rumor has it that the next in line, No. 25, bounced 850 checks with a face value totaling $150,000 in the period under review,” Lewis said.

One alternative, reportedly favored by most senior Republicans, would expand the list of worst abusers from 24 to 55 by including in that definition anyone who overdrew his or her account by more than one month’s net pay in two or more of the months under review. Other members would be free to request letters from the GAO detailing their account histories--letters that voters and political challengers could demand to see as the congressional election campaigns get under way.

But Lewis and a growing number of Republican lawmakers said that would still not be enough. “There is no middle ground when it comes to revealing members of Congress who bounced checks,” Lewis said. “The public will not settle for the release of 24 or 55 names. It is time for full disclosure. It is the right thing to do.”