Jim Wright makes it the old-fashioned way

National Review, Oct 23, 1987 by Cort Kirkwood

Earlier this year, and before any of the above had hit the national press, the House Banking Committee--chaired by Fernand St Germain, a buddy of Wright's and another juicy target for some ambitious prosecutor--took up the problems of Texas's endangered S&Ls, then facing net operating losses of some $1.68 billion. On June 9, William Black, deputy director of FSLIC, was scheduled to testify before the Subcommittee on Financial Institutions, also chaired by St Germain. In the middle of the hearing, St Germain announced that he was canceling Black's testimony, claiming that Black had "misinterpreted our letter in terms of the primary purposes of the hearings.' As an eyewitness told me, "someone walked in with some papers,' whereupon St Germain told Black and his entourage that their testimony was canceled. "We couldn't believe what we were

hearing,' the eyewitness said. St Germain promised to get in touch with FSLIC about future testimony but never did.

Contrary to St Germain's statement, an advance copy of Black's testimony shows that he intended to speak on exactly those issues raised in the sub-committee's invitation: "the possible causal relationship between bank fraud or insider dealing and bank failures.'

So what was the problem? That advance copy of Black's testimony painted a bleak and damaging picture that could have hurt Wright's allies in the S&L industry. According to syndicated economics writer Warren Brookes, who has followed the Wright story closely, St Germain had passed Wright an advance copy of Black's testimony shortly before summarily canceling Black's appearance.

It has not been established that Wright asked St Germain to keep Black from testifying. But if Wright did do that in order to keep his contacts with Gray from being revealed, the tactic failed. Black, and eventually Gray himself, later disclosed the dealings between Gray and Wright. Said a source at FSLIC, speaking on condition that he not be named, "We figured that Congress knew about the testimony, so why shouldn't the public? So we released it.' This source told me that when reporters began asking why the testimony was canceled, the story of Wright's intervention with Gray gradually began to emerge.

St Germain, by the way, is himself on very friendly terms with the industry he supposedly regulates. In April of this year a House-ethics-committee investigation found that he had accepted free airplane rides from Florida Federal Savings and Loan, profited on real-estate deals arranged by Florida Federal executives, purchased 1,500 shares of Florida Federal stock after the FHLBB accepted its application to become a public company, and, on financial-disclosure statements, repeatedly underestimated his net worth by more than $1 million. The ethics panel concluded St Germain had broken no laws and had only trivially violated House rules. It recommended no punishment.

WRIGHT, AS ONE might expect, is a champion pork-barreler, which is not remarkable unless your business associates are in the bacon trade.