The savings and loan scandal did more than bring tears to the eyes of the President's third son last week. Suddenly, through the lens of one man's life, the larger saga of an industry gone corrupt snapped into sharp resolution. The grief that crossed the fresh, Boy Scout face of Neil Bush struck a human chord of sympathy. But it also created a moment of clarity, defining the situation.
It was not thugs in ski masks who drained billions and billions of dollars from the nation's S&Ls. It was hundreds of (mostly) respected citizens in pinstripes who, seeing that deregulation had left the door to the vault wide open, walked in and grabbed what they could -- or at the very least allowed others to do so.
With the release of government documents spelling out the conflict-of- interes t allegations, and reports that the Federal Deposit Insurance Corporation (FDIC) might file a $200 million civil suit against him and the other officers and directors of Denver's Silverado Banking, Savings and Loan Association, Neil Bush replaced Charles Keating as the S&L poster boy. His father interrupted his final press conference at the Houston economic summit to defend the besieged 35-year-old Denver businessman. "What father wouldn't express a certain confidence in the honor of his son?" asked the President as his voice cracked with emotion. "If the system finds he's done something wrong, he will be the first to step up and do what's right."
Neil Bush may be the Velcro that Democrats have needed to attach blame for the S&L debacle to the President. Despite being in charge when the multibillion-dollar casino was opened, Republicans have been feigning shock -- shock! -- that any gambling was going on at all. The Administration has belatedly been making a great show of prosecuting the most egregious offenders. Just last week the government charged high-profile Dallas thrift owner Edwin McBirney III with 17 counts of bank fraud. Cleaning up the mess at his Sunbelt Savings Association of Texas, which was taken over by regulators in 1986, has so far cost $2 billion.
But while the Administration was taking credit for nailing McBirney, it was attracting criticism for allowing yet another set of dealmakers to get rich. Last week Senate judiciary subcommittee chairman Howard Metzenbaum called on the government to tear up a deal made by M. Danny Wall, former chairman of the Federal Home Loan Bank Board, with Arizona insurance executive James Fail. In 1988 Wall allowed Fail to acquire 15 insolvent Texas S&Ls in exchange for $1,000 in cash and $70 million in borrowed money, and threw in $1.85 billion to cover the liabilities of the bankrupt thrifts. Fail in 1976 had been indicted for securities fraud in Alabama. Though the charge against Fail was dropped, a company he controlled pleaded guilty to fraud. According to federal regulations, that should have disqualified Fail.