AUSTIN, TEX. -- The role that Texas played in the savings and loan scandal is clear to many outsiders: Texas was the villain.
It was in Dallas that developers with diamonds on their pinkies first started using their thrifts as personal piggy banks. It was from Austin that state regulators left by the Mercedes-load to work for thrifts they once examined. It was a Texas thrift operator's "High Spirits" yacht that plied the Potomac with an ample supply of booze and members of Congress aboard.
It is also in Texas that one-third of all Federal Bureau of Investigation thrift probes are taking place. And it is to Texas, according to some analyses, that too much of the rest of the country's money will go in a thrift cleanup that is being called an unfair regional transfer of wealth.
That is the outside view. But in the intramural political struggles in Texas this year, the state's role in the savings and loan calamity is fuzzier. The search for villains and victims here is complicated by an overarching sense of defensiveness, a feeling capsulized by North Texas University economist Bud Weinstein: "Texas is sick of being the easy scapegoat for New England and the Midwest."
When the issue is raised in Texas political contests, it is generally Republicans taking the offensive. In the free-wheeling race for governor, Republican oilman Clayton Williams tried to make something out of the savings and loan issue last week, but abandoned the effort after three embarrassing days.
It began when Williams went on television with an ad questioning S&L deposits made by the state treasury and campaign contributions from thrift executives to his Democratic opponent, state Treasurer Ann Richards. The ad named some Richards contributors in the industry, including Jenard M. Gross, a former officer of United Savings in Houston.
Gross immediately demanded a public apology and retraction. In a letter to Williams, he noted that he had contributed to many Texas Republicans -- President Bush, Sen. Phil Gramm, Gov. Bill Clements, Rep. Bill Archer and lieutenant governor candidate Rob Mosbacher, son of Commerce Secretary Robert A. Mosbacher -- and that those donations, like the one to Richards, were made "because I want to see the best people in the job." The check he sent to Richards, he noted, came a year after he had left United Savings.
The Richards campaign also showed that the state did not lose money with its savings and loan deposits, and that none of the thrifts that donated to her campaign was among those holding state deposits. Moreover, the Democrats pointed out, Williams once gave money to Richards at a time when a Midland bank in which he was involved was receiving state deposits.
The ad was swiftly withdrawn under the cover that Williams was calling a truce on negative advertising. The truce lasted one day, but when the ads went negative again, the savings and loan scandal was no longer the issue.
Other than his TV attack on Richards, Williams's position on the S&L mess is unclear. He does not talk about it on the campaign trail, and he and his staff did not respond to questions posed by The Washington Post three weeks ago. Richards, who also is basically quiet on the issue on the campaign trail, has nonetheless testified twice before congresssional committees on the subject and answered The Post's questions.
One of Richards's closest associates and major contributors is Austin developer Gary Bradley, who has often explained to her his philosophy of how the federal regulators helped devastate the Texas economy, first by loosening the regulations on thrifts, then by taking over the foreclosed properties of S&Ls that went under and dumping them on the glutted real estate market.
That essentially is the Richards position, and it reflects to a great extent the way Democrats are treating the issue on a national level. Democrats, in most but not all cases, pin the blame on the deregulation policies of the Reagan-Bush administrations. Republicans, in contrast, often try to link Democratic candidates to questionable characters and practices: Their three main targets this year are Reps. Doug Barnard Jr. of Georgia and Frank Annunzio of Illinois, two key players in the Capitol Hill thrift saga, and to a lesser extent Rep. Jim Chapman of east Texas.
"I've spent more time reading about the savings and loan issue than anything else over the past six months," said Gary Koops of the National Republican Congressional Committee. "We think it can be a cutting issue."
Responded Howard Schloss of the Democratic Congressional Campaign Committee. "The Republicans are grasping at any straw they can to try to get at the Democrats on the issue, but it has not worked to this point."
There are some places where Democrats are emphasizing the sleaze factor: They have gone after Oregon Republican Rep. Denny Smith, who sat on the board of a thrift while serving in Congress, and California GOP Rep. Charles J. Pashayan Jr., who was one of the major congressional benefactors of S&L scandal luminary Charles H. Keating Jr. And, while not tied to a specific race, they have made a national political issue out of President Bush's No. 3 son, Neil, who sat on the board of directors of the bankrupt Silverado Banking, Savings & Loan Association in Denver that provided major loans to Neil Bush's business partners.
But while Democrats elsewhere are smiling at Neil Bush's troubles, many in Texas agree with former House speaker Jim Wright (D), whose fall from power coincided with his questionable handling of the savings and loan issue. In a recent essay in the Houston Chronicle, Wright wrote, "The glee with which some of my fellow Democrats have seized upon the involvement of President Bush's son Neil in a failed Colorado savings and loan is symptomatic of a sickness in our political society . . . the most prominent symptom of the illness is the incessant search for scapegoats -- not for causes and solutions, but for villains in order to personalize the blame."
Gubernatorial candidate Richards said she considered the Reagan era's deregulation "the greatest fraud in the entire S&L scandal." She also said she thought Texas was being singled out for blame by politicians in other parts of the country. Northeastern and midwestern members of Congress, including many Democrats, are pushing for legislation that would require Texas to pay a higher proportion of the cleanup costs because so much of the problem orginated here.
"Texas-bashing has now become a congressional spectator sport," Richards said. "Heaven knows, there's plenty of blame to go around -- in Texas, Colorado and the rest of the country. However, I believe the failure of federal regulation was the real culprit in the S&L disaster. Influence-peddling, double-dealing and out-and-out fraud were committed under the noses of, and what has appeared to be complicity and downright encouragement of, the federal regulators."
Asked whether she thought federal regulators were too restrictive with Texas thrifts when the economy here started to fall in 1986, Richards said, "After almost a decade of incompetent regulation, the federal government suddenly woke up and put on the brakes. The federal government has now effectively 'redlined' Texas." At a congressional hearing in June, Richards did not mention fraud, but argued that the combination of tight reregulation and the falling Texas economy "was devastating to both the thrift industry and the businesses it supported."
That version of thrift history is disputed by those who believe fraud was a greater factor. FBI Director William S. Sessions, testifying at a hearing in Dallas in April, noted that one-third of the bureau's thrift investigations were in Texas. "Although it was the general economic downturn in Texas that surfaced the problem," Sessions said, "it appears to the FBI as if a pervasive pattern of fraudulent lending activity began much earlier."
Of all the Texas races this year, the east Texas congressional matchup between Chapman and Republican Hamp Hodges deals the most with savings and loans. Chapman is still feeling the aftereffects of the special election he won in 1985 with the help of S&L money raised by Tom Gaubert, a Dallas real estate developer and thrift operator who rose to influence as a financier with close ties to two key Democrats -- former speaker Wright and former majority whip Tony Coelho (D-Calif.), both of whom resigned amid ethical questions that included their handling of the S&L issue.
Much of the money for the "independent expenditure" campaign run by the East Texas First political action committee in that 1985 special election came from illegal S&L donations. Several thrift executives have been indicted in connection with the case. When Donald Dixon, the former president of Vernon Savings and Loan, one of the most extravagant thrift failures in Texas, was indicted in June, the 38-count indictment noted that some illegal Vernon money went to the east Texas congressional race. The Justice Department, at Chapman's request, swiftly noted that he had not been implicated in any wrongdoing, but the matter nonetheless hangs over his reelection effort.
"I think it is definitely working to our favor," said Donna Moreson, Hodges's campaign manager. "People are tired of this sort of dealing going on -- and Chapman benefited from it even if he wasn't responsible for it."
Chapman's campaign manager, Bill Brannon, said Hodges's efforts to make the savings and loan scandal the central issue has not been a complete success. "I won't say there hasn't been any fallout from it," Brannon said, "but we can't see much of it in the talk at the barber shop and coffee shops."