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Neil ignored the possibility that the high rollers of Denver were seeking him out for something other than his financial experience; at 30 he had very little. It did not take long for Bill Walters and Kenneth Good to embrace him after he struck out for Denver in 1980, almost exactly as his father had traveled to West Texas to seek his fortune 32 years before. "I didn't have a red Studebaker," Neil says, "but I wanted to be in the oil business."
He went to work for the Amoco Production Co. but within two years founded JNB Exploration Co. Walters invested $150,000 in JNB, about half the money Bush needed to get started, and received a limited 6.25% interest that allocated 19.5% of JNB's pretax profits to him. There never were any. Good bought a 25% limited partnership in 1983 for $10,000. The next year, Good lent Bush $100,000 to play in the commodities market with the understanding that he would not have to repay it if the investment went belly-up. Bush admits that was an "incredibly sweet deal." Over the next six years, JNB sold shares in 28 wells but did little more than cover costs and salaries. Says Neil: "I was not a high-rolling oilman."
Despite his lack of success as a wildcatter, Bush became an outside director of Silverado in 1985. Although he says the officers and other directors of the bank were aware of his connections to Walters and Good, the knowledge seems to have been spotty. The Office of Thrift Supervision has accused Bush of "one of the worst kinds of conflict of interest" for not disclosing that he would benefit from extending a $900,000 line of credit to Good for an Argentine oil- exploration deal. Bush argues -- and has documents to corroborate the claim -- that everyone knew of the two men's business connections and that the line of credit was simply a way of dealing with the Argentine bureaucracy and was never intended to be exercised.
OTS charges a second conflict-of-interest violation when Good in 1986 asked the board to restructure $14 million in loans on troubled real estate projects. According to the agency, Bush should have told the board that Good had just signed an agreement with JNB contemplating a further cash infusion of $3 million. Silverado lost at least $13 million on the restructuring. Bush argues in response that the directors of Silverado knew more about Good's liquidity than he did. The OTS also cites Bush for not abstaining from voting on transactions involving Walters. But Bush claims the law did not require him to.
Bush's effort to fight back could be costly and ultimately futile since the regulators' diligence from this point on may be judged by how effectively they handle the case against the President's son. His comment that in cities like Denver "everybody has relationships, everybody knows everybody" only adds to the image of insider deals made with government guarantees that privatized profits and socialized losses. Bush must answer the OTS charges at a Sept. 25 administrative hearing in Denver.