WASHINGTON -- Seven members of Congress who aided an Arizona company in a bitter regulatory fight with the Federal Home Loan Bank Board have received more than $150,000 in campaign money this year from the firm's officers or their families.
The campaign contributions, traced in Federal Election Commission reports by United Press International, appear linked to American Continental Corp., which has lobbied intensely to reverse a sweeping bank board regulation.
One congressional aide, who asked not to be identified, said a lobbyist for the firm headed by Charles Keating Jr. also began tentatively inviting several key members of Congress last week on a company-paid post-election junket to the company's Phoenix headquarters.
The aide quoted the lobbyist as saying those accepting the invitation may be offered 'honorariums' for their appearances.
American Continental owns Lincoln Savings and Loan Association ofIrvine, Calif., which has a substantial stake in a controversial board regulation aimed at curbing risky investments by state-chartered savings and loan associations.
Bank board Chairman Edwin Gray has vigorously defended the regulation as vital to protecting the government insurance fund that has been depleted by a series of savings and loan failures. He argued in a speech last week that easing the regulation would allow savings and loans to operate as investment companies 'on the implicit full faith and credit of the United States.'
Critics say the restriction prevents savings and loans from participating in highly profitable ventures.
UPI reported last week that Rep. Charles Pashayan, R-Calif., who lobbied hard against the board regulation, has received at least $26,000 in campaign donations this year from Keating, his son Charles Keating III, his son-in-law, Robert Hubbard Jr., other company officers and their families.
A further review of FEC records disclosed a pattern of similar contributions to six other lawmakers involved at least peripherally in the regulatory battle and running for re-election or higher office Tuesday: $55,000 to Rep. John McCain, R-Ariz., favored to win a seat in the Senate; $20,000 to Rep. Doug Barnard, D-Ga.; $19,000 to Sen. Alan Cranston, D-Calif.; $14,000 to Sen. John Glenn, D-Ohio; $12,000 to Rep. Jim Kolbe, R-Ariz., and $5,000 to Sen. Mack Mattingly, R-Ga.
Asked about the lobbying effort, Gray said in a telephone interview, 'Nothing surprises me any more in terms of the vehemence in which this particular regulation has been opposed by some -- even members of Congress.'
Interviews with recipients of the American Continental donations, their aides and other congressional sources disclosed that they:
-Proposed legislation and put pressure on Gray in 1985 to delay implementing the regulation barring savings and loans from investing more than 10 percent of their assets directly in real estate, securities and other risky ventures without board approval.
-Backed a nominee to the bank board who supported Keating's contention that tha 10 percent limit on such 'direct investments' was too restrictive.
-Pressed Gray this fall to delay for 30 days his plans to extend the regulation for two years. At the time, Keating's forces harbored hope that President Reagan would nominate Atlanta lawyer Lee Henkel and University of Rochester professor George Benston to vacancies on the three-member bank board. Both have had financial ties to American Continental and their appointments would have been seen as tilting the three-member board in Keating's favor before a vote on the regulation.
-Helped block an 11th-hour move by Sen. William Proxmire, D-Wis., to enact the regulation into law as the 99th Congress ended.
Keating has declined to return phone calls from UPI. But Lincoln Savings and other state-chartered institutions have showered the bank board with objections to the regulation, asserting it is too restrictive on about 2,000 healthy thrifts.
Tory Clark, McCain's press secretary, the biggest recipient of American Continental-linked money, acknowledged that he co-sponsored a House resolution in 1985 urging Gray to delay for six months implementation of the regulation. Like Pashayan, another co-sponsor, McCain is not a member of the House Banking Committee.
She said McCain supported the resolution 'so that people would have time to comment on the regulations.'
'Charlie Keating is a friend' of McCain, she said, noting the lawmaker has spoken to American Continental's employees 'on several occasions.'
Barnard heads a House Government Operations subcommittee that held hearings on the issue and concluded in a report that direct investment heightens risks for savings and loans.
But this fall, Barnard acknowledged, he sent a letter urging Gray to extend from 30 to 60 days a comment period before renewing the regulation for two more years. He also co-signed a similar letter that Kolbe sent on Oct. 15.
At the time, the White House was considering Henkel and Benston for the board, although only Henkel was ultimately selected.
Asked about the campaign contributions, Barnard said, 'I have had no pressure from American Continental ... on this subject or any other subject.'
Mattingly, a Senate Banking Committee member and another American Continental campaign beneficiary, proposed Henkel's name to the White House. Richard Moore, Mattingly's press secretary, said Henkel approached Mattingly and told him he 'was interested in the position.'
Moore said Keating 'did call the office but Senator Mattingly did not return his call.'
He added, however, that Mattingly does 'not care much for the leadership of Mr. Gray' and feels 'it is important to get fresh blood on that board.'
Kolbe, a member of the House Banking Committee, said Keating visited his office more than a year ago and expressed 'consternation' about Gray.
Kolbe said he also recalled phoning the White House on behalf of Henkel's nomination. He said he sought an extension of the comment period this fall because 'the industry was seeking more time to respond' to Gray's plans to extend the regulation, which he considers too restrictive.
On Oct. 18, the last day of the 99th Congress, Proxmire, the ranking Democrat on the Senate Banking Committee, sought to put the direct investment regulation into law as a condition of agreeing to recapitalize the Federal Savings and Loan Insurance Corp.
But congressional sources said Cranston, a Banking Committee member, Glenn and several other senators objected.
An aide to Cranston dismissed questions about the campaign contributions, saying the senator opposed rushing the legislation into law. He noted Cranston commonly gets campaign help from the savings and loan industry.
Dale Butland, Glenn's press secretary, said Glenn wanted to delay action on grounds that 'legitimate questions' about the issue need further exploration.
Keating, a former Cincinnati resident, 'has been a longtime friend and supporter of Mr. Glenn,' but, 'Anyone who knows John Glenn knows that he does not trade his support for issues for financial contributions,' Butland said. Two former Glenn aides now serve as Keating lobbyists.
James Barth, an economics professor at George Washington University who co-authored two studies for the board, said the board has rarely cited his finding that 'direct investment had no direct relationship' to savings and loan failures.
But he said he also found that the FSLIC faces sharply higher costs for failed institutions that made such investments.
In an internal memo Friday, Joseph McKenzie, director of the bank board's policy analysis division, said that of 37 institutions that had direct investments exceeding 10 percent in December 1983, 21 have collapsed or are in serious financial trouble.
McKenzie also wrote that to date, only 14 of 151 institutions that have requested approval from the board's 12 district offices under the regulation have been denied. Some 64 applications already have been approved, he said.
