White House Credit Union Saddled with Loan Losses : Politics: The Administration says it has no say in the accounts. Comparison to House bank is called invalid.

After gloating over the embarrassment that the House bank scandal brought Democratic leaders on Capitol Hill, the White House sought Wednesday to divorce itself from a disclosure that its own credit union has one of the worst rates of delinquent loans in the nation.

In the midst of a political season turned into an accountant’s nightmare by revelations of bad checks in the House, White House Press Secretary Marlin Fitzwater said the number of White House staff members with delinquent loans does not reflect on the Administration’s ability to manage the nation’s finances.

“The credit union is an entirely independent entity. Its management, its operation, its functions have nothing to do with White House staff management or functions,” Fitzwater said.

The situation at the White House facility was revealed in a front-page story by the Washington Times on Wednesday. The paper said the National Credit Union Administration had found the 3% loan delinquency rate at the White House credit union to be about twice the national average, and worse than 83% of the rates at credit unions of its size.

The credit union said that White House employees had been unable to pay back $304,000 in loans during Bush’s three years in office, and that the loans were written off as losses. Payments on another $338,340 are late, but the credit union has not yet written off those loans.

Fitzwater and Bush campaign strategist Charles Black sought to differentiate between the now-defunct House bank, which was run by its own rules, and the credit union, regulated by the National Credit Union Administration.

“The problem with the House bank was that the Democratic leadership was responsible for running it. The President’s not responsible for running the employee credit union,” Black said.

Still, others within the Administration and outside the immediate Bush circle recognized a potential for political embarrassment brought on by the credit union, to which President Bush and Vice President Dan Quayle belong, along with 4,700 other people--gardeners, custodians, Secret Service agents, policy-makers and former White House aides among them.

One Administration official, alluding to Texas billionaire H. Ross Perot’s flirtation with an independent campaign for the presidency that would play on Perot’s reputation as a “can-do” maverick outsider, said: “It’s paragraph two of Ross Perot’s announcement speech.

“It is symbolic of the overall mess in Washington. Even if it is substantively meaningless, it is symbolically bad enough on the face that it makes it difficult for the White House to point fingers at Congress,” he said.

Bush, whose reported account of $1,000 produced $82 in interest last year, according to his 1991 tax return, made no comment on the situation. “Yeah, I had one,” he said, acknowledging his account as he bounded back to the Oval Office from a Rose Garden ceremony.

Quayle’s savings and checking accounts at the credit union earned $2,244 in interest in 1991.

Fitzwater said that the credit union, run by a board chosen by members, operates from space in the White House complex, which includes two office buildings, but is otherwise unaffiliated with the Administration.

“It could just as easily have been called the Lafayette Park credit union,” complained one White House staff member, referring to the park across Pennsylvania Avenue from the White House.

“It makes loans to its members at an interest rate, unlike the House bank, seeks repayment under existing banking and federal credit union laws, unlike the House bank, and it’s authorized to seek that money through any legal statutes that are available to any other banking institution,” Fitzwater said.

The House bank advanced funds to cover bad checks written by House members, and charged no interest on the advanced payments. It was not subject to federal banking regulations.