U.S. to Probe Whether Checks Violated Laws

The House bank scandal escalated Monday when a U.S. attorney announced that he is investigating the check-cashing practices of members of Congress and the White House acknowledged that it is trying to determine whether any high-ranking federal officials who are former lawmakers were involved.

While no taxpayers’ money was lost because of the now-defunct bank’s practice of regularly covering overdrafts, federal laws prohibit knowingly writing a check without enough funds on deposit to pay for it, authorities said.

Federal investigators also will seek to determine whether federal laws against fraud, improper campaign spending or failure to declare interest-free loans on federal income tax returns may have been violated by members of Congress with accounts at the bank.

In a related development, White House Press Secretary Marlin Fitzwater said that President Bush’s counsel, C. Boyden Gray, is “making a check” to determine whether any former GOP lawmakers who have joined Bush’s team had cashed bad checks, including Vice President Dan Quayle and the President himself. Fitzwater said, however, that Bush did not overdraw his account when he was a House member from 1969 to 1971.

“It’s just common sense that we ought to know,” Fitzwater told reporters.

Earlier in the day, Fitzwater had acknowledged that one Cabinet member was under investigation in connection with the bank, but declined to release that person’s identity.

Five Cabinet members were in the House during part of the period in question--Housing Secretary Jack Kemp, Interior Secretary Manuel Lujan Jr., Labor Secretary Lynn Martin, Agriculture Secretary Edward R. Madigan and Defense Secretary Dick Cheney. Lujan and Kemp denied writing any bad checks, while the others said that they were checking their records before making a statement.

The announcement of the investigation by U.S. Atty. Jay B. Stephens marked a new turn in the fast-breaking scandal that has rocked Congress and triggered estimates by political experts that as many as two dozen incumbents could be defeated in November because of it.

A spokesman for the federal attorney said that the investigation, which he described as preliminary, was begun last fall when the General Accounting Office issued a sharply critical report on the bank’s willingness to tolerate thousands of overdrafts without penalty.

Stephens’ spokesman, Mark Liedl, initially said that a criminal investigation was under way. But only hours later, the Justice Department and the prosecutor’s office issued a clarifying statement that downgraded the procedure to a “preliminary inquiry.”

A preliminary inquiry is an early stage investigation that includes reviewing documents and conducting voluntary interviews. Unlike a full-scale investigation, it does not involve presentation of evidence to a grand jury, surveillance or compelling testimony or documents.

The office now is reading last week’s House Ethics Committee report on the bank “to determine what, if any, additional action may be appropriated,” a statement from the U.S. attorney said.

Since the GAO issued its report last fall, the House has ordered the bank closed and the House Ethics Committee has issued a report citing 19 current and five former members as the worst abusers of the casual banking system during a recent 39-month period.

The House also decided in a 426-0 vote early Friday morning to list the names of all 355 current and former House members who wrote one or more bad checks during the period under scrutiny.

While Republicans on Capitol Hill attempted to fix the blame for the bank mess on the Democrats who control Congress, President Bush withheld judgment, saying that each case would have to be analyzed separately.

“People are outraged by it,” Bush told reporters. “I’m waiting and watching it unfold. It’s an institutional thing. . . . I’m not jumping on any individual and I think everyone has his or her own case to make to their constituents, to the people.”

The names of 23 of the 24 lawmakers found to be the worst abusers of the bank’s lenient overdraft policy, including 16 current Democratic members of the House and two Republicans, already have been revealed in news leaks. Names of the 24 are to be formally released by the House on Monday. Names of 331 other current and former members are to be announced April 2.

In a preliminary political damage assessment, outside specialists and party officials said that the furor over the bank would be a factor in some, but not all, of the districts where incumbents wrote sizable numbers of bad checks. Democrats, who outnumber Republicans in the House 268 to 166 and have controlled the chamber more than 30 years, are expected to suffer most.

“This will increase turnover by a couple dozen,” predicted Thomas Mann, a congressional scholar at the Brookings Institution. “There are people with clear interests in keeping it alive, including challengers, Republican strategists, term-limit advocates and radio talk-show hosts.”

Spencer Abraham, head of the Republican Congressional Campaign Committee, said that the Democrats’ control of the House would make Democratic candidates more vulnerable to GOP challengers, especially if they held leadership roles.

“The guys who are going to take the biggest hit there are the people running the store,” Abraham said.

Jim Thurber, director of the Center for Congressional and Presidential Studies at American University, speculated that the reelection rate for House members could drop as low as 90% this year after running at 96% or more in recent years.

The rate dropped to a low of 87% in 1948, when Harry S. Truman won the presidency.

“It’s going to be hard to defend yourself against a challenger who makes that (bank scandal) an issue,” Thurber predicted.

Susan Webb Hammond, a professor of government at American University, said the fallout may come sooner than November.

“It may have some effect, particularly in the spring primaries,” she said. “If the economy gets better, it may not have much effect in the fall elections. . . . Like term-limits and the (congressional) pay raise, it becomes a focal point of citizen anger at government.”

A Democratic source predicted that at least five Democrats on the list of the 24 worst abusers may be vulnerable to strong GOP challenges this fall. Most of the other Democrats, however, either will survive or will yield their seats to other Democrats, the source predicted.

Rep. Jim Leach (R-Iowa) put it this way: “This country has a deep-seated antipathy to socialism but a strong belief (that) there should not be a privileged class. If Congress is seen as a privileged class, it’s vulnerable.”

Members of Congress, noting that the bank’s generous overdraft protection dated as far back as the 1800s, have said that the bank sometimes failed to make timely postings of deposits other than monthly paychecks. They also said that the bank routinely failed to notify members of overdrafts if they occurred near the end of a month or were less than the next month’s take-home pay.

House Sergeant-at-Arms Jack Russ, who was responsible for managing the bank, has resigned under pressure from the Ethics Committee, which criticized his management practices.

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