Regulator Says Keating Backer Wanted Him Fired -- Ethics Committee Told Of Pressure From Jim Wright

WASHINGTON - Former House Speaker Jim Wright tried to get a federal thrift regulator fired because he sought tough enforcement action against financier and political contributor Charles Keating and his California-based Lincoln Savings & Loan, the regulator told the Senate Ethics Committee yesterday.

William Black, a counsel for the Federal Home Loan Bank Board, told the Ethics Committee that in January 1989, Phil Duncan, an aide to Wright, called the bank board chairman's office and requested that Black be fired. The call was taken by Carl Hoyte, the board's director of congressional affairs.

Black had become one of the central figures pushing for action against Lincoln, which was found to be in violation of regulations more than two years before it was seized by the government in April 1989. He was working for the bank board in San Francisco at the time of Duncan's call and was not fired from his job.

Wright, according to the House investigation of the former speaker for alleged ethics violations, was also angry with Black because he was believed to have been the source of articles about Wright's intervention with the bank board regarding Texas thrifts.

Black's efforts against Lincoln also made him a target of Keating, who in July 1987 wrote a memo to James Grogan, his chief legislative liaison, saying, ``Highest priority - get Black.'' In his testimony, Black has asserted that pressure from senators delayed action against Lincoln and vastly increased the cost of the federal bailout of depositors, now expected to be more than $2 billion.

Five senators - John Glenn of Ohio, John McCain and Dennis DeConcini of Arizona, Donald Riegle of Michigan and Alan Cranston of California - are accused of intervening on Keating's behalf with regulators after collecting $1.3 million in contributions to their campaigns and causes.

Black testified that the pressure from the senators caused the bank board to remove the Lincoln case from the San Francisco office and

transfer it to Washington.

``This is the most likely explanation for this completely unprecedented and grossly improper action of halting the examination that would have blown all these things so wide open,'' said Black, noting that it was later found that Lincoln had created a tax scam that allowed its parent company to siphon off millions of dollars.

Black was repeatedly asked by committee members about the April 9, 1987, meeting in which the regulators investigating Lincoln met with the five senators in DeConcini's office.

Several committee members indicated they did not understand why the regulators failed to convince the senators Lincoln was not worthy of their support. Black said they tried: ``We were the best friend that the five senators had. We were trying to tell them this is not the institution you want to be going to bat for.''

Black said they outlined that the institution made $1 billion in investments without an underwriting policy, that its 52 largest loans were made without credit reports and that the people running it were incompetent.

When the subtle approach did not work, Black said, they stepped up the rhetoric, calling Lincoln ``a ticking time bomb.'' Black told the committee that the senators were listening, but ``they were coming back with defense, after defense.'' The committee said yesterday it expects to bring Grogan, who has been offered limited immunity, to a closed session Dec. 17 and that public hearings will follow.

The committee said the five senators will not be called as witnesses until after Keating's legislative liaison testifies.

Meanwhile, the hearings will be delayed for nearly two weeks to make way for the testimony of Keating's top lobbyist, a move that could push the proceeding into early next year but could also provide some telling evidence.

Keating is the savings-and-loan executive and generous political contributor who repeatedly enlisted the help of the five senators in his battles with federal banking regulators from 1984 to '89, and prospective witness James Grogan who was often his go-between on Capitol Hill.