Federal thrift regulators said they will hold open hearings on their investigation of alleged banking law violations by President Bush's son Neil, the director of the Office of Thrift Supervision announced yesterday.
OTS Director T. Timothy Ryan decided to open the proceedings, which for months have been conducted behind closed doors. Ryan's action came as part of a general policy change at OTS, an arm of the Treasury, to make public any proceedings against executives whose savings institutions have been seized by the government as part of the multibillion-dollar cleanup of failed thrifts.
Under U.S. banking laws, the OTS has responsibility to safeguard the operations of the thrift industry.
Bush, who has denied any wrongdoing, was a director of Silverado Banking, Savings and Loan Association of Denver from mid-1985 to mid-1988, when he resigned to work on his father's presidential campaign. The thrift failed in late 1988 at an estimated cost to taxpayers of $1 billion.
The OTS yesterday ordered Neil Bush to appear at a public hearing in Denver on Sept. 25 to explain why, as a director of Silverado, he approved loans to a business partner and engaged in what the government claims were other violations of his fiduciary duty to the savings institution.
Ryan's decision follows by two weeks revelations in Congress of government charges that Neil Bush "engaged in unsafe or unsound practices" while a director of Silverado. The specifics of the charges previously had been kept secret under OTS procedures. Members of Congress then requested that future proceedings of the Neil Bush case be conducted openly.
Ryan said yesterday that he conferred with Treasury officials, but not the White House, about the decision.
President Bush last week said he had discussed Silverado with his son, but only "in that broad parental way." He expressed confidence in his son's "integrity and honor" and in the ability of the system to handle Neil's case without regard to his being the president's son.
Neil Bush said in a telephone interview yesterday that he personally welcomes a public airing and looks "forward to telling my side of the story." He would have objected only if his case been singled out for public hearing, he said. The details of the Bush case and three other unrelated cases were released as part of the new OTS policy.
But Neil Bush said he still objects to the entire proceeding because he believes he was singled out for enforcement action in the first place.
Regulators originally sought to bar Bush from banking. But Bush refused to sign an agreement to that effect and instead contested the facts the regulators used to make their case against him. In response, the regulators lowered their sights, asking only that Bush agree to "cease and desist" from repeating the alleged wrongdoing.
Bush, who is no longer associated with an S&L, refused to sign the order, and the case became part of an administrative hearing within OTS.
Administrative proceedings are handled within agencies rather than in the courts and are overseen by an administrative law judge. OTS director Ryan, however, who was appointed by President Bush, will be the ultimate decision maker.
Ryan said that from now on, OTS generally will reveal charges and conduct hearings in public for officers of thrifts already seized by the government. But he said that proceedings for thrifts not under government control generally will be conducted in private.
Thrift regulators said the ultimate impact of yesterday's ruling will depend on how many executives or officials refuse to sign enforcement actions.
Most people elect to sign them, regulators pointed out, avoiding any hearings at all. For example, five of Silverado's former officials signed the agreements. Only Bush refused. A similar ratio holds industry-wide, regulators said.
In the first five months of 1990, federal thrift regulators have issued 174 enforcement actions.
Bush's lawyer, James Nesland, said that he objected to the proceeding being made public because he thinks it will create a "political sideshow and a media sideshow."
Despite Ryan's decision to open all similar cases, Nesland called the action, "the Neil Bush policy." But Ryan said it is "in the public interest" to make the procedures public.