A longtime director of the Federal Home Loan Bank Board in Topeka, Kan., was fired last week after congressional investigators alleged that he had engaged in several conflicts of interest, including borrowing from and trying to buy thrifts he helped regulate.
A House Budget Committee task force, which investigated Richard M. Hughes, said in a report released yesterday that Hughes had taken $6 million in loans from five thrifts in the Topeka district, all of which had become delinquent. The task force said it could not learn the current status of those loans, but the Topeka home loan bank staff estimated that the loss to the government from Hughes's loans at one Oklahoma thrift would be $2.8 million.
Hughes, who was a member of the bank board for 11 years, was fired by the Federal Housing Finance Board on Dec. 13, one day after investigators brought their concerns to the board.
The regional home loan banks regulated S&Ls until August 1989, when the new thrift cleanup law placed that responsibility with the Office of Thrift Supervision. OTS spokesman Bill Fulwider said he was unfamiliar with Hughes's background.
The home loan banks play a significant role in support of savings and loan institutions by supplying credit reserves for them.
A spokesman for the finance board, which now appoints bank board members, said Hughes was going to be replaced at the end of the year anyway because he has moved to Texas, out of the Topeka bank board district. The financial allegations, he said, raised concerns and prompted his immediate removal, although there have been no charges of illegalities made against Hughes.
Hughes could not be reached for comment.
The spokesman also said, "We have undertaken a comprehensive review of the whole financial disclosure process. The lawyers are looking at what the standards are and what they should be." In the meantime, the agency has asked all its directors for more financial information, including questions about whether they have loans with thrifts in their districts.
Alleged conflicts of interest involving Hughes began surfacing in 1986 and were investigated by the Topeka bank board's general counsel. Hughes was asked to resign at least twice, by the president of the Topeka home loan bank and by the chairman of its bank board, but he refused. Bank board officials in Washington and Topeka, however, never acted to remove him.