Sen. Bob Kerrey (D-Neb.) was incorrectly identified yesterday as the source of a quote praising L. William Seidman, chairman of the Federal Deposit Insurance Corp. The statement was made by Sen. John F. Kerry (D-Mass.) (Published 8/4/90)
The FBI has begun an investigation into an aspect or aspects of the so-called 1988 Southwest Plan, the first phase of federal government's efforts to sell off sick savings and loans, L. William Seidman, the overseer of the savings and loan cleanup, told the Senate Banking Committee yesterday.
"We're reviewing it, along with the FBI and all the rest," said Seidman during a portion of the hearing that dealt with the 1988 deals.
It was unclear whether Seidman meant the FBI was investigating the federal government's much-criticized sale of 15 Texas thrifts to James M. Fail or conducting a broader inquiry into deals under the Southwest Plan, which encompassed dozens of savings and loans. Officials from the Justice Department and FBI declined to comment on Seidman's remarks and Seidman's aides said they were unclear on what he meant.
For the past month, Sen. Howard Metzenbaum (D-Ohio) has lambasted Fail's purchase of thrifts now consolidated into Bluebonnet Savings Bank of Dallas as an "outrageous" government giveaway.
The Senate Judiciary Committee voted unanimously yesterday to begin the process of enforcing subpoenas issued to Thompson, who refused to appear before Metzenbaum's committee earlier this week. If Thompson fails to testify and produce requested documents at a hearing on Monday, the committee can seek to have the full Senate ask a federal judge to find Thompson in contempt.
Both Republicans and Democrats used much of the three-hour long Banking Committee hearing yesterday to plead with Seidman to stay on as the chairman of the Federal Deposit Insurance Corp. and the Resolution Trust Corp., the agency in charge of the savings and loan cleanup. Seidman, whose term expires in October 1991, said Wednesday he is under pressure from White House Chief of Staff John Sununu to resign.
Sen. Bob Kerrey (D-Neb.) told Seidman he could not understand why "the one experienced man who has the confidence of Congress, who tells it like it is, faces pressure to resign."
"I don't want anyone running you out of this job," said committee chairman Sen. Donald W. Riegle Jr. (D-Mich.). "I feel very strongly about it."
Asked whether Sununu was trying to force him to resign, Seidman said, "There are those who have indicated they would like to have me leave this job... . They want to have someone in the job who will be here for a long time and who will be their appointee. I'm a Reagan appointee."
Seidman said he did not want to leave "until I have gotten the RTC up and running," but said he has not decided how long he will remain. Although a presidential appointee, the FDIC chairman is one of the few high-ranking government officials who cannot be fired.
Seidman touched on a wide range of other issues in his testimony, including:
Golden parachutes for thrift operators. Seidman asked the senators to amend the law to prohibit or limit excessive or abusive payments to departing executives, saying the heads of failed savings and loans have "lined their pockets" at the expense of federal deposit insurance funds. Riegle promised the committee would seek legislative changes.
Home exemptions for thrift operators. Seidman said he strongly favors amending the federal bankruptcy code to prevent those who have defrauded banks or thrifts from using state laws to keep their homes, some of which are valued at as much as $15 million.
Insuring depositors. Seidman said he believes the FDIC should have more control over whether a financial institution is federally insured. "The insurers should be able to say, 'This institution does not have a good chance of succeeding,' " he said. "A great many new institutions were chartered" that presented an immediate "threat to the insurance fund."
Recovering the money. Seidman said the FDIC has been awarded nearly $300 million in civil settlements and judgments against thrift executives in the first half of this year, officers and others responsible for savings and loan failures.
Foreign bank accounts. Seidman said investigators know that thrift operators have transferred funds to foreign banks, but are finding the trail "very hard to follow."
Mob influence. Seidman said "we have certainly found evidence in certain institutions of mob involvement" but the pattern is "not pervasive."
Bank fraud. Seidman said he does not fear "some new, systematic problem" of fraud at banks. Savings and loans showed a "tremendous increase in fraud" in the 1980s, he said, but "we have not seen that increase" at banks. Staff writers Jerry Knight and Dana Priest contributed to this report.