A House banking subcommittee announced yesterday that it will hold public hearings to look into the role Cleveland's commercial banks played in the fiscal collapse of that city.
Rep. Fernand J. St Germain (D.R.I.), chairman of the House Banking Committee subcommittee on bank supervision, said Cleveland Mayor Dennis Kucinich and the heads of the six major Cleveland banks would testify before his subcommittee on June 21.
"Numerous charges have been raised about the finances of the city and the manner in which the Cleveland banks have responded to various financial and political issues in the municipality," St. Germain said, adding that it was "incumbent" on his subcommittee to examine those charges.
Kucinich, who came to Washington in January to urge a congressionl investigation into events surrounding the default of his city the month before on $15 million in bank notes, said in a telephone interview yesterday that he welcomed the probe.
"This is the first time in U.S. history that the silent system of control of government by big business will be open for public inspection," the controversial mayor said.
"It's very encouraging that Mr. St Germain's subcommittee will attempt to untangle the intricate web of inter-relationships and behind-the-scenes dealing that pushed Cleveland into default," he added.
Kucinich had charged that the banks attempted to force him to sell the municipal power system to the privately-owned local utility before agreeing to roll over the city's debt, a charge the bankers deny.
It was reported last January that at least one of the banks had several ties to the privately-owned utility, and stood to profit, at least indirectly, from such a sale.
A subcommittee source said that all six banks have already agreed to send representatives to the hearing, and that in most cases it was likely the chief executive of the bank would attend.