The Justice Department has widened its criminal investigation of House Banking Committee Chairman Fernand J. St Germain (D-R.I.) by subpoenaing entertainment records of the Securities Industry Association, the largest trade group for investment bankers.
The SIA said yesterday that all its records pertaining to St Germain were requested by Justice officials late Tuesday, making it the third major lobbying group to receive a subpoena. The U.S. League of Savings Institutions, the largest lobby group for the savings and loan industry, and the American Bankers Association, the largest lobby group for the banking industry, were subpoenaed last month for their records pertaining to St Germain.
The probe is believed to be focusing on allegations that St Germain improperly has accepted food, drink, travel and other entertainment gifts from lobbyists for the financial service industries.
The probe was opened last month, just three months after the House Ethics Committee ended a 14-month inquiry into allegations that St Germain had enriched himself by engaging in several business deals that involved potential conflicts of interest with his office.
The committee found that the veteran Rhode Island lawmaker had violated some House rules and the federal ethics law by underreporting his assets, but it recommended no punishment. It did not investigate St Germain's entertainment expenses.
Yesterday the House reaffirmed the committee finding by rejecting a move by conservative Republicans to reopen the investigation in light of the Justice Department inquiry.
The House, voting 291 to 111, mostly along party lines, yesterday defeated a resolution sponsored by Rep. Newt Gingrich (R-Ga.) that would have directed the ethics panel to probe allegations that lobbyists had frequently paid St Germain's dining and entertainment expenses.
Only one Democrat, Rep. Romano L. Mazzoli (D-Ky.), voted for the resolution.
The Justice Department investigation began shortly before the House and Senate banking committees reached final agreement on major banking legislation. Congress passed the legislation this week amid major lobbying efforts by the banking, securities and S&L industries.
The Justice Department probe was made public last month when the Wall Street Journal published a story saying the U.S. League's records had been subpoenaed.
The securities industry is widely considered by congressional aides and lobbyists to have been the major beneficiary of the banking bill, in part because of its powerful influence on St Germain and other key banking committee members. The S&L industry, also considered to wield considerable influence, for months stalled efforts to get the banking bill passed.
"We, of course, will comply with the request," an SIA spokesman said yesterday. He said the SIA will not comment further. St Germain's lawyer, Milton Semer, said he had no comment.
Yesterday's vote in the House was another skirmish in what has become a long-running battle by House Republicans to highlight what they call a "pattern of corruption" in the House. Gingrich and several of his colleagues had also pressed unsuccessfully in June for the creation of an independent ethics commission, contending that the House ethics committee has failed to police the activities of members.
Rep. Julian C. Dixon (D-Calif.), the chairman of the ethics panel, argued that the Justice Department investigation was one reason the House panel should not resume its probe of St Germain. But Gingrich argued that the allegations against St Germain were relevant to "a massive savings and loan scandal building in this country" that Congress would eventually have to contend with.
Gingrich and an ally, Rep. Robert S. Walker (R-Pa.), interpreted the Democrats' unity on the resolution as a response to another Wall Street Journal article yesterday that questioned House Speaker Jim Wright's ties to a Texas developer. The article reported that Wright had profited from his business dealings with Fort Worth developer George Mallick at the same time Mallick was was trying to get a stake in a federally aided development in that city