Bush’s Son Denies Conflict of Interest in Colorado Thrift Dealings With AM-S&Ls-Budget, Bjt
WASHINGTON (AP) _ President Bush’s son Neil on Wednesday told a congressional committee investigating the $1 billion collapse of a Colorado thrift that his business relationships didn’t conflict with his role as a director of the thrift.
Neil Bush, who served three years on the board of directors of Silverado Banking, Savings and Loan Association of Denver, told the House Banking Committee that allegations of conflict of interest from federal regulators ″are frivolous.″
″The fact they are being pursued is baffling to me,″ said Bush, 34, an oil and gas developer.
Bush appeared amid tight security with four other former directors as the committee voted to issue subpoenas to former Silverado executives and others who ignored invitations to testify.
Bush told the committee his business relationships with two of Silverado’s major borrowers, developers Kenneth Good and Bill Walters, ″don’t create a conflict in fact or in law.″ Regulators have alleged that loans by Silverado to the two were a conflict of interest for Bush, who had oil and gas business deals with the men but failed to disclose that relationship to Siverado’s board.
Bush said Walters was ″a passive, limited partner in JNB″ Exploration, Bush’s company, but had no involvement in operations of the enterprise. Walters put $150,000 into JNB.
Bush said his own investment was $100 ″and sweat. I was out there working every day. I generated the deals.″
A federal regulator told the committee Tuesday that Bush, a focal point of the inquiry into the Silverado failure, approved $106 million in loans to Walters, who defaulted on the entire amount.
″There was no conflict of interest,″ Bush said of the loans. ″I didn’t have any financial interest or any interest otherwise in ay of″ Walters’ enterprises.
Good and Walters failed to appear before the banking committee and were among those to whom the panel issued subpoenas.
Rep. Jim Leach, R-Iowa, defended Bush. ″It’s inconceivable that Neil Bush wittingly did anything wrong,″ Leach said. ″He appears to have been used.″
Stephen Hershkowitz, deputy director of enforcement for the Office of Thrift Supervision, and other regulators said Tuesday that Silverado made inflated loans to developers who had to reinvest part of the money in the thrift.
The regulators told the committee that under the ″quid pro quo″ lending program at Silverado, developers received loans to buy buildings at inflated values set by outside appraisers.
In exchange, the developers were required to use the surplus part of the loan money to buy preferred stock in Silverado’s holding company or to purchase an interest in a ″loan pool″ set up by the thrift.
The former Silverado directors were aware of the ″quid pro quo″ program and the ″loan pool″ but they disagree with the regulators’ characterization of them, their attorney, Barry Hovis, said after the hearing.
Bush told the committee he rejected the regulators’ conclusions, outlined in a lengthy report on Silverado. ″There’s no support for that document,″ he said.
″I don’t think that every time there’s a business failure, that you necessasrily have to finger-point,″ Bush said. ″To finger-point and to look for crooks where there are none is not doing a service to the country.″
Bush and the four other ex-directors who appeared with him also disputed the regulators’ assertions that the Silverado board was a ″rubber stamp″ for management and that insider abuse occurred at the thrift.
″We were all extremely aware of our fiduciary responsibility,″ said Diane E. Ingels, one of the former directors. Others testifying Wednesday were Richard J. Bunchman, Marjorie K. Page and Richard F. Vitkus.
Bush said he never used his influence as a son of then-Vice President Bush to slow the closing of Silverado and said he made clear when he joined the board that he would not be used politically.
Bush conceded that his father’s position may have been a factor in his election to the board. He was a director from August 1985 to August 1988, resigning two weeks after his father won the GOP presidential nomination. The S&L collapsed in December 1988.
The committee displayed a 1985 letter to Silverado shareholders from former chairman Michael R. Wise, saying Bush had agreed that if he joined the board he would take no part in actions involving Good or Walters.
Bush told the panel, however, ″There was never an agreement.″