WASHINGTON — Portraying himself as a scapegoat, M. Danny Wall resigned as the nation's chief savings and loan regulator Monday to quell congressional criticism that he underestimated the thrift crisis and failed to prevent the $2.3-billion failure of Lincoln Savings & Loan.
Wall, who has headed the Federal Home Loan Bank Board and its successor agency since July, 1987, said that his departure was not the result of pressure from the White House. President Bush had said recently that he would ask Wall to leave if he found that the regulator was responsible for the collapse of the savings and loan industry.
In a four-page letter of resignation sent to Bush, Wall said he was resigning primarily because members of Congress have unfairly made him "a scapegoat to shoulder the blame for the entire thrift crisis." He said he feared that his fight with congressional leaders was going to undermine government efforts to restructure the industry.
Not surprisingly, Rep. Henry B. Gonzalez (D-Tex.) praised his decision. "I believe Danny Wall has done the best thing for himself and the federal regulatory system," said Gonzalez, who has led a chorus of Democratic congressmen calling for Wall's resignation.
Gonzalez, who heads the House Banking, Finance and Urban Affairs Committee, has been pressing for Wall's resignation ever since last August. At that time, the Senate insisted on protecting Wall's job as part of legislation that bailed out the thrift industry and transformed the Federal Home Loan Bank Board into the Office of Thrift Supervision, under the control of the Treasury Department.
Sources said that Wall's job was preserved last summer at the insistence of Sen. Jake Garn (R-Utah), who has continued to lobby on his behalf. Wall is a protege of Garn.
Wall, clearly embittered by the blame heaped on him by members of Congress in recent months, charged that Gonzalez had improperly singled him out for criticism during six weeks of recent committee hearings into the Lincoln scandal. Wall was summoned to testify on the final day of the hearings after many witnesses had criticized his policies.
"Having failed to secure my departure legislatively, Mr. Gonzalez resorted to corruption of the truth and abandonment of our historical devotion to fair play and due process in his effort to remove me from office," Wall said.
Members of Congress have charged that Wall failed to appreciate the magnitude of the savings and loan crisis while it was developing. It is now estimated the crisis will cost the American taxpayers $280 billion over 30 years--far more than Wall ever predicted.
Wall has also been accused of bowing to pressure from Lincoln owner Charles H. Keating Jr. and Keating's supporters in Congress by rejecting the recommendation of examiners that the federal government seize Lincoln in 1987. Critics charge that Wall's refusal to seize the Irvine, Calif., institution until last April was a mistake that will cost the government $2.3 billion.
Wall has admitted that he met personally three times with Keating during the two years in which Lincoln was being investigated by the bank board. Internal agency documents indicate that Wall had expressed a desire to settle the matter amicably.
At the news conference at which he announced his resignation, Wall denied that he had done anything wrong and suggested that supervising the thrift industry over the last few years was probably an impossible task. "It may, indeed, have been a no-win situation," he said.
Administration pressure for Wall's resignation began mounting last Nov. 12 after Bush declared that he would replace the current thrift regulators if he received evidence that they had not been aggressive enough in cracking down on the industry when the losses began to climb.
According to an aide, Wall notified White House Chief of Staff John H. Sununu just prior to his testimony before the House committee on Nov. 21 that he intended to step down. Sununu made no effort to persuade Wall to stay and told him to arrange the details of his departure with Treasury Undersecretary John E. Robson, the aide said.
On Monday, Robson issued a statement commending Wall for his work in establishing the Office of Thrift Supervision and describing his decision to resign as "public spirited." He said the search for a successor already has begun.
At Robson's request, Wall has agreed to continue serving in his job until the Administration can arrange "an orderly transition." Neither Wall nor Administration officials were able to predict how long that would be.
Prior to his appointment as chairman of the bank board by then-President Ronald Reagan in 1987, Wall served as chief of staff for the Senate Banking Committee, which Garn headed from 1981 though 1986. His term as Office of Thrift Supervision director would have expired on June 30.
A number of Democratic congressmen have been calling for the resignation or firing of M. Danny Wall. Critics say that Wall failed to predict the magnitude of a savings and loan crisis that became apparent during his tenure as head of the Federal Home Loan Bank Board and its successor agency, the Office of Thrift Supervision. The crisis will cost American taxpayers an estimated $280 billion.
RELATED COVERAGE--Wall's resignation raises questions as to whether the Office ofThrift Supervision is necessary, and comes as the Securities and Exchange Commission is under fire. Business, D1