S&L Hearings Get Specific Over Actions of Senators

This week expected to highlight role of Alan Cranston

SENATE Ethics Committee hearings that resume today are moving from the general to the specific. Last week key witness Edwin Gray, the former chairman of the Federal Home Loan Bank Board, accused all four United States senators who met with him on April 2, 1987, of improperly pressuring him to go easy on savings and loan kingpin Charles Keating, whose S&L then was failing. The four senators are Alan Cranston (D) of California, Dennis DeConcini (D) of Arizona, John Glenn (D) of Ohio, and John McCain (R) of Arizona. Donald Riegle (D) of Michigan, the fifth senator under scrutiny, did not attend that meeting.

For much of this week attention is expected to focus on the activities of Senator Cranston on behalf of Mr. Keating, with the expected testimony of Cranston's fund raiser, Joy Jacobsen. Cranston and DeConcini are the two senators who intervened the most on behalf of Keating, according to the statements of committee special counsel Robert Bennett.

The hearings are being held to determine whether any or all of five US senators - sometimes referred to as the Keating Five - intervened improperly with federal bank officials on behalf of the Lincoln Savings and Loan Association, owned by Keating. Keating contributed some $1.3 million to the five senators or causes they supported.

All five senators vigorously deny any wrongdoing.

Mr. Gray, who was chairman of the Federal Home Loan Bank Board at the time of the meeting, told the committee that although Senator DeConcini did much of the talking, he kept using the pronoun ``we,'' and that the other senators did not dissociate themselves from DeConcini's comments.

Gray said he felt ``pressured'' by the four, and that the setting was ``intimidating'' because, he said, someone whose identity he cannot remember had told him he could not bring an aide with him, leaving him alone with the four senators. Gray said that in his experience with the bank board he had never previously been told not to bring any aide for a meeting with a member of Congress. However several of the senators under scrutiny, and some Ethics Committee members, have said that it is not unusual for members of Congress to hold meetings without aides.

Criticism of the group - this time including Senator Riegle - continued when Gray was succeeded on the witness stand by Michael Patriarca, one of four senior regulators with whom all five senators met a week after the meeting with Gray. Mr. Patriarca said that he felt all five had ``made up their minds in advance'' that Lincoln Savings and Loan was being persecuted by regulators working for Gray's board. He added that the senators did not seem to understand the gravity of Lincoln's deficiencies until regulators said they were seeking criminal prosecutions.

Ultimately, Patriarca separated Senator DeConcini's behavior from that of the others. During the meeting only DeConcini, he said, had acted in a way that Patriarca considered improper - ``attempting to get us, the regulators, to change our position on the examination'' of Lincoln S&L.

When Gray testified, he fired broadsides that often were inclusive of most or all five of the senators. ``Gray tends to overplay his hand,'' says Burt Ely, a consultant and expert on the savings and loan crisis. ``He is trying to tar them all. I think from Gray's perspective he's making a tactical mistake.''

During his testimony Gray sprayed accusations at more than just the five senators under scrutiny. He charged that Congress never passed any of his legislative proposals, that with one exception the White House never backed them, and that then-White House Chief of Staff Donald Regan adamantly opposed him.

Gray's tenure as chairman of the bank board was controversial, marked by criticisms of his spending and travel. During his testimony lawyers for several senators made a major issue of his credibility.

``I have felt for some time that Ed Gray has been extremely self-serving,'' Mr. Ely says. ``When you zero in on the guy, you find he really waffled on an awful lot of stuff when he was chairman, and one of the things he waffled on was Keating,'' - not acting swiftly enough to close down Keating's savings and loan.

Ely puts the principal responsibility for poor management of the savings and loan crisis on the Reagan administration; during part of that administration Gray served as bank board chairman.

``As egregious'' as the activities of any of the five Senators may have been, Ely says, they added ``not much to the cost of cleaning up the S&L mess,'' frequently estimated at $500 billion.

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