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At another Denver party Bush met Wise, who knew of Bush's close ties to Walters and Good. Silverado had underwritten Good's financial ventures with more than $35 million in loans. Wise also was involved in a complex of multimillion-dollar deals with Walters, one of Silverado's major stockholders and borrowers. Wise called up young Bush soon after the party, and they met for breakfast at a pancake house, where the bank executive offered Bush a directorship. Bush joined the board, despite his acknowledged lack of experience. "I think I was picked because of my background in oil and gas," Bush said later.
Within months Bush was voting to approve more than $100 million in loans to Walters, but without disclosing to the rest of the board his connections to the developer. Another Office of Thrift Supervision conflict-of-interest charge against Bush is based on a line of credit for a Good-Bush oil venture in Argentina that the young director proposed to the board. The problem: Bush failed to inform his colleagues that he had struck a series of deals with Good under which the developer would infuse JNB with $5 million in capital and combine the company with Gulfstream Land & Development, a $250 million land venture in Florida that Good was assembling. To clear the way for his Florida deal, Good asked the Silverado board to accept a complex restructuring of his debt and forgive $11 million of his loans and pledges in return for a $3 million cash settlement.
The other Silverado directors were apparently unaware that Good had agreed to increase Bush's JNB salary to $120,000 a year and provide tax-free bonuses, according to government records. At about that time, the developer had planned to make Bush a director of the Florida company, a post paying about $25,000 a year. Bush abstained from voting as Silverado's board approved the windfall deal for Good in November 1986, but regulators complain that Bush had failed to disclose that he was anticipating a huge investment from Good at a time when his benefactor claimed he did not have the money to pay his full debt to the thrift.
That year, alarmed federal and state regulators were undertaking a special examination of Silverado, and a concerned supervising agent lectured the board about insider deals. But at this point, according to the Office of Thrift Supervision, Bush was financially dependent on Good. Bush had received a $22,500 bonus and new promises from Good to indemnify Bush if he was called on to pay old JNB debts he owed to Cherry Creek National Bank.
As the oil-driven bubble in the Energy Belt finally burst, the relationship between Silverado and some of its developers passed from insider deals to apparent fraud as both sides schemed to keep each other afloat. Silverado needed fresh capital because it had so many nonperforming loans. Major developers like M.D.C. Holdings had property that it could no longer develop. So Silverado began trading its bad loans to M.D.C. for its sorry property. Says a former M.D.C. executive: "It was like Silverado was telling M.D.C., 'I'm going to trade you my dead cow for your dead horse.' " After keeping the bad loans on its books for a while, M.D.C. would sell them to a subsidiary, Home American Mortgage. That firm in turn pooled them in a real estate investment trust (REIT) so it could peddle them to other cooperating S& Ls.