"In hindsight, it looks as if we did a terrible job."
The comment was once more postmortem on the confirmation hearings the Senate Governmental Affairs Committee held Jan. 17 and 18 on Bert Lance's nomination as budget director.
But it was a mea culpa with special impact because it came from the man who did most of the staff work on the original Lance hearings - David R. Schaefer. Schaefer was then a counsel to the majority on the committee; now he is a legislative assistant to the committee chairman, Sen. Abraham A. Ribicoff (D-Conn.).
"We thought we did a vigorous job on preventing a conflict of interest." Schaefer said. "We were mainly interested in Lance's future. We didn't do a good job investigating his past."
Common Cause, the 250,000 member citizens' lobbying organization, has called the January hearings "one more example of the inadequacies of the confirmation process as practiced by the United States Senate."
Common Cause noted that the same Senate Committee had issued a report the same month as the Lance hearings on the importance of conducting independent investigations of nominees and not relying "on assurances by the appointing authority that the nominee is fit and suitable."
"Unfortunately," Common Cause said, the committee "failed to heed its own warning."
Asked about the Common Cause criticisms of the confirmation investigation the other day. Schaefer said sadly, "I couldn't agree more."
One Senate Source says the committee's action - or inaction, as it turned out - can be better understood by recalling the transition period between the November election and President Carter's inauguration Jan. 20.
On Nov. 24 press reports said Carter's old friend Lance would be his first nominee to a major. Cabinet-level post, that of director of the office of Management and Budget. In the next two months newspapers were filled with column about the affable, politically savvy Georgia banker who could rally the business community behind the new President.
"There was a lot of pressure," according to John B. Childers, the committee's minority staff director, who worked closely with Schaefer on the nomination. "We knew Carter wanted to swear in all of his Cabinet appointes the day he was inaugurated. All the committees were hustling to conform nominees before the deadline." All the nominees were confirmed Jan. 20 except Attorney General Grifftin B. Bell, whose approval was held up a few days because of controversy over his civil rights views.)
Lance met with committee staffers Jan. 13, four days before his hearings started. The staff had sent him two forms to fill out - a financial statement and one dealing with conflict of interest, the OMB and government reorganization.
"He was very cooperative," Schaefer recalled. "We understood his financial affairs were complicated and we had some reservations about his financial statement. He listed the number of shares he owned and the total value of his stock, but not the value of each stock. We tried to get market prices for a let of stocks and were unable to find them. Some, like the Calhoun (Ga.) First National Bank, are not publicly traded.
"But we didn't ask for a new statement. It seemed petty to ask him to undo it. I'm not sure we had the time or inclinator, to go into hetail. He told us his net worth was $2.6 million. We thought that if he was $200,000 or $300,000 high or low, what's the big deal?"
Lance areed to sell all his stock in the National Bank of Georgia, place his other assets in a blind trust and disqualify himself from taking part in bank regulatory matters as long as he owned substantial amounts of bank stock.
Looking back,Schaefer said the committee needed "a trained corps of people who know how to review a financial statement, who understand cash flows and how to check figures against other records. I still son't know all trat stuff."
Lance said Thursday and yesteerday that he discussed the Calhoun bank's involvement in his 1974 unsuccessful campaign for Georgia governor, including overdrafts by his campaign committee, but he admitted the discussion " did not include a microscopic review of may affairs."
In an interview earlier this week, Schaefer said that on Jan. 14, the day after the meeting weith Lance, he called Robert Bloom, then acting comptroller of the currency, about the 1974 campaign overdrafts.
"He said that it was something they [the comptroller's office] was aware of and there was nothing to it," Schaefer said.
"I asked him to put it in a letter to the committee, and he was noncommittal. He said there might be some problems, that he wasn't sure about a letter."
On Sunday, Jan. 16, the day before the hearing, John Childers, the minority staff director, received a phone call from an Atlanta man who charged that Lance had greater campaign and personal overdrafts than had been disclosed and that Billy Lee Campbell, a former Calhoun bank official imprisoned for embezzling money from the bank, was saying Lance had been involved in the case.
Childers told Schaefer about the call and the two staffers discussed it with Ribicoff. At his direction they then called Bloom back and insisted on a letter. They also called the U.S. attorney in Atlanta, John Stokes, and asked for a letter on the overdraft and embezzlement probes.
Assurances were given over the telephone, the letters arrived and, Childers said this week, "at that point the two federal agencies that knew anything about Lance gave him a clean bill of health. That's all we knew."
But they did not ask to see the FBI background report on Lance. Ribicoff told The Los Angeles Times Wednesday day that "we just took it for granted" that the report would not be turned over.
Richard A. Wegman, the committee's staff director, told the Times he had checked and found that only the Senate Judiciary Committee regularly received FBI reports on judicial nominees.
Schaefer told The Washington Post. "We were led to believe, strongly, at that time" by Robert Lipshutz, who later became White House counsel, "that we could not have it," Lipshutz said later he would have shown the report to Ribicoff and the committee's of Illinois, if he had been asked.
By the time Lance arrived at the Jan. 17 hearing "the committee was so anxious to confirm him that it fell all over itself," said one staffer.
Ribicoff began by asking Lance about the reports of the criminal investigation of his 1974 campaign overdrafts. Lance replied, "There were overdrafts, they were covered. The bank suffered no loss" and the comptroller's investigation found "no cause that there was anything that was wrong . . . "
Ribicoff quickly added, "We have been informed by the U.S. attorney's office in Atlanta that it terminated its investigation and that no grounds for prosecution were found.
"The press has reported that the decision to close your case was made the day before your nomination . . . was announced by President-elect Carter. Did you have any part whatever in the timing of the U.S. attorney's decision to close your case?"
"Absolutely not," Lance said.
That short colloquy was the full discussion that day of the overdraft issue. Lance did not disclose that his campaign overdrafts totaled more than $152,000 at one time; nor was he asked. He did not refer to the Campbell allegations; nor was he asked.
And he did not reveal that one of his attorneys, Sidney O. Smith Jr., had called U.S. Attorney Stokes two days before Lance's nomination was announced Dec. 3 to ask about the status of the case. Smith said later that he and Stokes had agreed it would be "dirty pool" to keep the investigation open because it was a weak case.
The senators devoted most of their time to praising Lance - "I admire the work you have done as a businessman and as one involved in state government," said Richard G. Lugar (R-Ind.) - asking whether he would try to end government red tap (yes), cooperate with Congress in federal budgetary matters (yes), and achieve a balanced budget by 1981 (yes).
The next day - with more Republican senators, including Percy and Jacob K. Javits of New York, attending - the committee heard more, but not much more, about Lance's financial affairs.
Percy was delayed in returning from the inaugural of his son-in-law, Jay Rockefeller, as governor of West Virginia. Javits, who also was late and who was apparently waiting for Percy to ask some of the questions, finally asked about Lance's outstanding Liability from the 1974 campaign.
Lance said he was liable for $250,000 but he did not mention a $140,000 loan that was guaranteed by Thomas M. Mitchell, the trustee of Lance's personal financial holdings and president of the Lance campaign committee.
Javits asked if Lance would take part in any fund-raising to pay off the debt.
"No sir, I would not."
Javits asked if the reason that Lance did not list the liability on his financial statement to the committee was that he believed the money could be raised by "contributions of individuals."
"I hope it will be repaid by that means. If not, I simply will have to repay it."
"And that you are well able to do, in terms of your net worth, are you not?"
Turning to the campaign and personal overdrafts, Javits said he understood they had been repaid.
"Yes, sir, that is correct."
"Yes, sir," Lance did not add that interest was paid only after June, 1974.
Asked about the comptroller's reports on overdrafts, Lance said, "Those are confidential."
"And therefore you feel you cannot make that response?" Javits asked.
Ribicoff interrupted to say that the comptroller's report was "on its way over now."
"I understood that too, we have a letter coming from the comptroller, which we understand states that it [sic] has no complaints to make about you in this connection, and indeed, in any of these connections, [in] which you have been questioned."
That ended Javits' inmquiry. Still waiting for Percy, he and Lance discussed long-range economic forecasts. As the Illinois senator entered the room, Javits said, "Sen. Percy has arrived, and I do not have to think of any more questions."
Percy, however, had nothing to ask about Lance's finances. He praised Lance for agreeing to dispose of assets that might present a conflict of interest and said the committee should pursue in a closed session details of Lance's indirect liabilities.(The committee never held such a session.)
Then Percy said, "I understand the investigation of thealleged campaign fund violations has now been totally and completely cleared up fully to the satisfaction of the comptroller and the Justice Department. That certainly satifies me on that."
This week, in the midst of the committee's renewed efforts to examine Lance's finances, Javits conceded that the questioning in the confirmation hearings "was not done deeply enough."
But he added, "For such a high office, he really owed us explanations for things that he knew and we didn't know."