Five U.S. senators, in an unusual show of support for a constituent, pressed federal regulators at a meeting last April to wind up a then yearlong examination of Lincoln Savings & Loan Assn. and to end "unfair treatment" of the Irvine-based S&L, a spokesman for one of the senators said Monday.
Lincoln is owned by an Arizona company whose president, Charles H. Keating Jr., has been a major critic of Edwin J. Gray, whose term as chairman of the Federal Home Loan Bank Board ended in June.
The senators who attended the meeting were concerned that Lincoln Savings was a victim of "over-regulation" by the FHLBB, said Bob Maynes, press secretary for Sen. Dennis DeConcini (D-Ariz.), whose staff organized the meeting. Other senators who attended were Alan Cranston (D-Calif.), John McCain (R-Ariz.), John Glenn (D-Ohio) and Donald W. Riegle Jr. (D-Mich.). Reports of the meeting were first published by National Thrift News, an industry weekly.
Sources Cite Battle
In particular, Maynes said, the senators worried that the regulators were forcing low reappraisals of real estate owned by the S&L, which would have contributed to a projected $167-million writedown of its assets. No such writedown seems imminent now, according to spokesmen for both the bank board and Lincoln Savings.
Cranston, who attended the meeting briefly, was concerned only with expediting the audit, his spokesman, Murray Flander, said. However, the audit is still continuing, although it is expected to end in about a month.
Lincoln Savings has about $4.3 billion in assets, earned $25.2 million in the first six months of this year and has twice the net worth regulators require. It has 27 branches and 1,200 employees. Its parent, American Continental Corp., is headquartered in Phoenix.
Much of the tension between the bank board and Lincoln has been attributed by sources in the industry and in Congress to the battle between Keating and Gray, who left his post in June as protests mounted over his reign as chief S&L regulator.
Under M. Danny Wall, current chairman of the three-member bank board, Lincoln and the regulators have reportedly been getting along well.
The FHLBB expects to conclude its regulatory examination of the S&L within a month, said Karl T. Hoyle, the bank board's executive director for public affairs. Both Hoyle and a spokesman for Keating said they expected a "fair resolution" of the examination.
The April meeting between the senators and bank board regulators from San Francisco came about at the suggestion of Gray, Maynes said. Gray could not be reached for comment.
Regulators at the meeting in DeConcini's office in Washington, all from the Federal Home Loan Bank in San Francisco, were James Cirona, its president, Michael Patriarca, Richard Sanchez and William Black.
Hoyle said there was nothing unusual about five senators meeting with regulators over the problems of one constituent. And Maynes played down the event, saying that each of the senators came from states where the S&L or its parent operate or conduct business.
But DeConcini has long been a foe of Gray's, urging Reagan Administration aides nearly two years ago to remove him as bank board chairman.
Other insiders claim that the meeting caused a stir in the Senate Banking Committee--of which Cranston and Riegle are members. At the time, the committee was considering a bill to recapitalize the Federal Savings and Loan Insurance Corp. and another congressional committee was reviewing bank board operations.
Gray Denies Harassment
In addition, Gray was under fire from the industry for his heavy-handed treatment of ailing S&Ls.
Keating claimed a year ago that regulators were "harassing" him and his companies during the examination at Lincoln in retribution for his criticism of Gray. Keating also has accused the bank board of leaking confidential information about the long audit of Lincoln in an attempt to discredit him.
Keating is a strong proponent of S&L deregulation. His spokesman said Keating sued the bank board over the alleged leaks, but withdrew the action after Gray stepped down.
Gray, who favored stricter regulation and now heads a savings and loan firm in Miami, said he was not harassing any savings institutions.
He accused Keating of trying to entice him out of his government post by offering him a job and he claimed that Keating was behind embarrassing leaks about Gray's expense account--reports that later prompted Gray to repay thousands of dollars spent on personal items.