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The self-assured Wise, who contributed handsomely to political campaigns, enjoyed the support of such influential officeholders as Colorado's Democratic Congressman Timothy Wirth, who later graduated to the Senate. Wise served two terms on the board of the Federal Home Loan Bank of Topeka, which regulates thrifts in the region. He even served as chairman of the regulatory policy committee for the U.S. League, the most influential S&L lobbying group. Openly, the League poured millions of dollars into political campaigns through its PAC. Says Edwin Gray, former chairman of the Federal Home Loan Bank Board: "I don't think it would be stretching it to say Wise controlled S&L policy and the way the industry developed."
In the late 1970s and early '80s, thrifts were struggling under the old rules because of inflation. Forced to pay high rates to attract deposits but dependent on low-interest, long-term home loans for revenue, the S&Ls saw their profits erode. Under constant pressure from thrift lobbyists, the old rules were felled one by one: in 1980 federal deposit insurance was increased from $40,000 to $100,000, money brokers were allowed to bundle massive deposits and thrifts were freed to make commercial loans.
Deregulation coupled with federal insurance set Silverado loose like a runaway stagecoach. "Silverado began to take advantange of that $100,000 insurance fast," says Hemming. Wise opened an office that did nothing more than generate new deposits by telephone solicitation. He advertised market- breaking high interest rates called the Silverado Prime. But paying those rates meant Silverado had to get a higher return on loans. To do this, Wise and Metz gradually moved Silverado out of the home-loan market, abandoning small local builders and buyers in favor of big depositors and even bigger developers.
The energy boom of the late 1970s and early '80s provided Silverado with plenty of opportunities for long-shot ventures with big returns. "It was a real Western boom that made the gold and silver days look pale by comparison," remembers Jim Thomas, executive director of Colorado's Independent Bankers Association. "We attracted all the con men, promoters, hucksters and sleaze artists in sight."
Silverado's officers had thrown prudent banking practices to the wind, and before long the S&L was locked into a constant seesaw battle with regulators. Says a former Silverado executive: "They began playing musical chairs with their auditors, and all kinds of things were going on between the federal regulators and management because of the dubious appraisals on property. Silverado would lend a developer $10 million, plus the money he needed to pay the interest on the loan, and then when the developer came back in a year after repaying nothing, they would roll the whole loan over and give him more money on top to pay new fees and interest. When inside auditors complained about irregularities, they ((the auditors)) were hushed up or let go."