Banking on secrecy; with our banks about to go the way of our S&Ls, it's time we made the Freedom of Information Act cover financial institutions too

Washington Monthly, Dec, 1990 by Teresa Simons

"If reporters like myself had gotten key documents, this S&L crisis would have been severely shortened," maintains a northern California reporter, Steven Pizzo, who, together with Mary Fricker and Paul Muolo, published a book about the thrift industry's collapse, Inside Job, last fall. Pizzo says it took him four years to develop sources who would risk prison to brown-bag him confidential thrift reports. "We had to depend on court cases and hope attorneys would attach exhibits. We had to look at bankruptcy cases, and we prayed for divorces because they were very revealing. . . . But we shouldn't have to work on a story like a Quija board."

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Despite the obstacles, some reporters have managed to demonstrate that government documents are often the key to uncovering corruption at banks and thrifts. Jerry Kammer and Andy Hall of the Arizona Republic, using their state's revealing records on real estate transactions, found that while DeConcini defended Keating from what the senator called "rogue bureaucratic regulators," two of DeConcini's top campaign aides amassed more than $50 millioninreal estate loans from Lincoln Savings. By examining an exhibit attached to a lawsuit, The Houston Post's Peter Brewton found out that $7 million of the $20 million a Texas S&L had loaned out for a development project went to a company that was laundering drug money. Because her newspaper went to court, The Washington Post's Kathleen Day obtained two Bank Board memos that said D.C. councilwoman Charlene Drew Jarvis and her political adviser and social companion, Woodrow Boggs Jr., successfully pressed the agency to sell an ailing thrift to Citicorp, without disclosing that lobbyists for the New York banking giant had paid Boggs $60,150. But reporters more often than not are still turned down in their requests for information. Even now, when they get information leaked to them they never know whether they're looking at the elephant's leg or the whole elephant. Congressional researchers and public interest groups have the same difficulties.

Assigned to sell off and liquidate thrifts, the Resolution Trust Corporation (RTC) has acknowledged that it has allowed some of the thrifts' former executives to continue to draw six-figure salaries from the government, even though they are no longer working full time for the institutions and may be responsible for their demise. But the RTC has refused to release details on these salary arrangements, prompting Ralph Nader's Public Citizen interest group and Cox Newspapers to file a freedom of information lawsuit against the agency in September, a process that could take years to pry loose any information.

It took nearly three months of cage-rattling for a House Banking Committee staff member to obtain the OTS documents he needed to assess 94 deals the government made with buyers of failed thrifts in 1988. No wonder. The staff members's findings, relased to the committee in September, revealed that regulators required the fat cat thrift buyers to invest a mere $2.2 billion in exchange for the government's contribution of $175 billion.