WASHINGTON — The Senate handed President Bush an important victory Wednesday by confirming T. Timothy Ryan Jr. as the nation's top savings and loan regulator, despite his lack of financial experience and admissions of past drug use.
After a determined lobbying campaign by the Bush Administration, the Senate voted 62 to 37 to grant Ryan a five-year term as director of the Office of Thrift Supervision.
As head of the agency, Ryan will preside over the government's efforts to salvage the scandalized thrift industry and to determine which S&Ls are so badly crippled that they warrant seizure.
"If we want the S&L crisis to be met head on, let's give Tim Ryan a chance," said Senate Minority Leader Robert Dole (R-Kan.). Seventeen Democrats, most of them from the South, joined the Senate's 45 Republicans to give Ryan a comfortable margin of victory.
The Administration was particularly anxious to get Ryan confirmed to guarantee that the OTS will have unquestioned power to regulate the trillion-dollar thrift industry, which is undergoing a traumatic shrinkage and restructuring.
"It is vital the Senate act now," said Sen. Jake Garn (R-Utah). "The critical enforcement authority of the OTS is being thwarted in the courts."
Last month, a district court judge blocked the impending government takeover of an Illinois S&L on the grounds that former OTS Director M. Danny Wall was never confirmed by the Senate. An appeals court stayed his order and will take up the case next Wednesday, when the Senate will be in recess.
Garn argued that confirming Ryan as the nation's chief thrift regulator would remove the cloud of legal uncertainty over the OTS and bolster the agency's authority.
Clear-cut enforcement power is vital because it "enables the OTS to place thrifts operating with inadequate capital under government conservatorship or receivership," said Garn, the ranking Republican on the Senate Banking Committee.
Democratic opponents argued that Ryan, a pension lawyer and former Labor Department official, lacked the financial expertise to help clean up the aftermath of the biggest financial scandal in American history.
Hundreds of thrift institutions have collapsed in recent years, destroyed by a combination of excessively risky investments, weakening real estate markets and, in some cases, insider fraud.
The government insures customer deposits up to $100,000, so taxpayers ultimately will bear the burden of shutting down insolvent thrifts at a cost that could reach $285 billion over the next 30 years.
Sen. Alan Dixon (D-Ill.) noted that billions of dollars were stolen by crooked S&L managers who reaped "big yachts, fields full of racehorses, huge diamonds."
The resulting financial mess requires an OTS chief with more expertise than Ryan, he said.
"Someone to address the scandal was brought to us--they send us a man, and the defense of this man was, 'we couldn't find anybody (else),' " said Dixon. "My God, we couldn't find anybody."
For the massive S&L repair job, "you want somebody of towering capacity," said Sen. Donald W. Riegle Jr. (D-Mich.). "At a minimum, you want somebody who has a well-established reputation as an expert in finance. This is a big, big job."
Ryan's supporters said that specific expertise was not necessary and that his determination and managerial abilities would be sufficient for the task.
"Does this man possess leadership?" Sen. John Warner (R-Va.) asked rhetorically. "That is what is needed to move into the eye of the storm surrounding the savings industry." Expert knowledge is no assurance of success, argued Dole. "I don't think you have to be a thrift insider, a so-called thrift expert, to take on the job of overseeing the savings and loan industry," he said. "Let's face it, it's the insiders who got us where we are today, drowning in a cesspool of unbridled greed and fiscal irresponsibility."
Ryan's admissions that he used marijuana and tried cocaine once or twice in the 1970s were brushed aside by his defenders and did not become a serious issue in the debate over his qualifications.
Sen. Arlen Specter (R-Pa.) referred to a survey showing that 65 million Americans had tried marijuana and 21 million had used cocaine. It is "an unpleasant fact of life" that millions have experimented with these illegal drugs, Specter said. However, he said, "this is not a disqualifier" for persons seeking important jobs.
Dole voiced anger over public leaks last week of the information about Ryan's drug usage. The disclosure was contained in FBI reports available only to members of the Senate Banking Committee.
"We shouldn't be using FBI files just to smear someone," Dole said. "What he may have done 17 years ago, it's (now) public and it ended 17 years ago."
If the drug usage had derailed Ryan's nomination, "then we're going to wipe out a generation of men and women about that age . . . who may have experimented at one time or another with some type of drug," Dole said.
Sen. Spark Matsunaga (D-Hawaii) was the only senator who did not vote on the confirmation.