Gramm Reportedly Aided Thrift Owner Who Cut Fee on Home
Sen. Phil Gramm (R-Tex.) helped a Texas thrift operator deal with regulators after the man picked up more than $50,000 worth of building expenses on Gramm’s home, the New York Times reported Sunday.
The man’s three savings and loans collapsed in 1989 and their bailout will cost taxpayers an estimated $200 million, federal regulators said.
Gramm is a member of the Senate Banking Committee, which is overseeing the cleanup of the nation’s savings and loan scandal. The collapse of several once-prominent savings and loans has cost taxpayers billions of dollars.
The Dallas businessman, Jerry D. Stiles, was a prominent developer when he took on a building project for Gramm and his wife in 1987 after they bought 35 shoreline acres in Maryland, the Times reported.
The couple needed a contractor to finish construction on the shell of a two-story vacation house, the newspaper said.
Stiles flew workers from Texas to Maryland to finish the vacation home, the newspaper said.
He also put up $117,000 for labor, materials and travel expenses to complete the job, then asked Gramm to pay only $63,000, which was the maximum amount the senator said he was willing to pay, the Times reported.
“I do not believe for a minute that the work on my house was worth more than I paid for it,” Gramm told the Times.
Gramm and Stiles described the extra expenses as an overrun Stiles assumed voluntarily.
After the FBI investigated the relationship between Gramm and Stiles, Gramm wrote a check for the balance of the money, plus interest. But after the Senate Ethics Committee cleared Gramm of wrongdoing, he kept the money, the Times said.
Stiles had bought the Hallmark Savings & Loan Assn. of Plano, Tex., in 1984. By 1989, regulators determined that institution and two other thrifts he owned were insolvent.
According to the Times, Gramm advised Stiles on federal rules that would determine which savings and loans would be allowed to remain open. Gramm also urged federal regulators to listen to Stiles’ requests for aid and for waivers from federal rules, the newspaper said.
