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A. It's the power, an ego trip. Ed Gray was ignorant, a person whose background was public relations, all of a sudden being put in charge of a $1 trillion industry. Where do you think they got these regulators? Off the streets, out of ads. They took this conglomeration of inexperienced and untrained people and they say, O.K., go out and cope with the Charlie Keatings who are diversifying the S&Ls. You've got a bunch of know-nothings trying to tell business people how to invest money.
Gray wrecks it and then says the greatest financial debacle in the history of the world is Keating's fault. They are not just taking down guys like me. In Colorado Springs the Government owns practically all the property, as they do in Arizona. You think all of this is occurring because of me? It's occurring because of incompetent, wrongheaded regulators. Not one program has saved one S&L. Maybe they didn't line their own pockets, but they're lining a lot of other people's pockets. They gave S&Ls away from October to December 1988. They are causing fortunes to be made by these assets that they're confiscating, being given into other people's hands for nothing. They took a hotel away from me, the Phoenician resort, that's probably the best hotel ever built in the U.S., and they've turned it into a Holiday Inn. Why doesn't the media ask, Good God in heaven, what's happened here? What if I'm right? That's what you're going to find out a couple, three years from now when my body's dead and my family's destroyed.
Q. But with these direct investments you were trying to have it both ways: you stood to make a lot, but if the investment went sour it was the taxpayer who bore the risk.
A. Mortgages are risky too. Let's say you have a billion dollars out in home loans, and the average rate on those home loans is 5%. But then rates go up and you have to pay more to attract deposits. So all of a sudden you're paying out 8%, but you're still catching 5% coming in. That loan's bad right now. You're out of business. There's no way you can ride that out.
Q. Lincoln made a $3 million profit the year before you bought it, when it was just in the business of making home mortgages.
A. Absolutely wrong. It had a profit because it sold a branch. Lincoln was a basket case.
Q. But the cure -- letting S&L operators make risky investments -- turned out to be worse than the problem.
A. A few, very few, miscreants were involved. Some guy buys windmills, another guy steals, another guy buys Cadillacs and provides whores and yachts for customers. But you do not have, according to studies by Professor George Benston and Alan Greenspan ((now Federal Reserve Board chairman)), a very significant part of the industry doing that kind of stuff.
Q. 60 Minutes showed you bragging about paying your secretaries $80,000 a year and giving a raise to $100,000 to one of your secretaries.
A. You're right, it's to be criticized. It was braggadocio and grandstanding. That isn't me. But I did that. You're right, and I shouldn't have done it. That was stupid.
Q. But you did pay high salaries in general.