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WHO NEEDS JIM WRIGHT?

TEXAS, THAT’S WHO REGARDLESS OF WHAT THE ETHICS COMMITTEE TURNS UP EVEN THE SPEAKER’S ENEMIES ARE PULLING FOR HIM - BECAUSE OUR ECONOMY NEEDS ALL THE HELP IT CAN GET.
By Sally Giddens |

THE FRAGRANCE OF TYLER ROSES FILLS THE WAITING ROOM OF Jim Wright’s Washington office. And these aren’t just any old Tyler roses, mind you-they’re “Betty Wright” roses, lavender in hue and sweet as a soft Texas drawl. Casually stuck in vases here and there in the room, the roses serve to remind visiting Texans of home-to put them at ease in this office of the man third in line for the presidency. And if the roses don’t do it, Jim Wright himself surely will.

“Young lady, may I get you a libation?” Wright asks as he gracefully holds the door open for a reporter to walk into his office.

A what? A libation! When is the last time you heard that word? Probably on a rerun of ’The Virginian.” Is this guy for real?

That’s a question on the lips of many these days, as the House of Representatives ethics committee continues its investigation of the speaker of the House.

The official questioning of Wright’s ethics was prompted by House gadfly Newt Gingrich, a Republican representative from Georgia who has made it his political mission to buzz annoyingly around Democratic House speakers. Last year, Gingrich began soliciting negative press about Wright and his financial dealings. For a long while, Gingrich was like a lone dirt dobber randomly flying around looking for a place to light, but more often blindly bumping into a wall. It took more than a year before Gingrich’s mass mailings of anti-Wright material, including critical news stories published years ago, began to produce results. This spring, after prompting articles and editorials in several national publications, including The Wall Street Journal, Gingrich swooped down for the sting. When Common Cause, a nonpartisan though usually liberal government watchdog, called for a full-scale investigation of Wright, Gingrich made his move. On May 26, he filed a formal complaint with the House ethics committee. Gingrich says that the allegations are not based on “first-hand knowledge.” but rather on “information and belief.”

A letter accompanying Gingrich’s complaint was signed by seventy-one other House Republicans, including former presidential hopeful Jack Kemp. Other heavy-hitters and all but one member of the Texas delegation were notably absent from the list. The complaint asked the ethics committee to investigate whether Wright profited financially by improperly lobbying for two Texas oil companies and publishing a book as a way for contributors to bypass campaign finance rules. On June 10, the ethics committee announced that it would look into Gingrich’s allegations along with concerns raised by Gingrich and Common Cause regarding Wright’s intervention with federal savings and loan regulators on behalf of Texas citizens.

It is his involvement with Texas’s ailing thrift industry that has attracted Wright some unlikely allies. Texas Republicans, who under normal conditions would be downright gleeful over the speaker’s troubles, are uncharacteristically quiet. Some have even come out in support of Wright. Just days after the ethics committee announced its probe, Republican Senator Phil Gramm-no Jim Wright lover by any stretch of the imagination-told the media, “I don’t think Jim Wright is a crook.. .”

Though Wright is certainly used to fielding criticism and has a long history of sparring with the press, by all reports the venom in Gingrich’s latest sting went deep. Characteristically, Wright swatted back hard, responding in a twenty-three-page statement answering each of the allegations point by point. Wright’s openness won support from both Democrats and Republicans in the House. But the ongoing negative publicity probing every nook and cranny of Wright’s financial and political dealings has taken the pleasure out of what would have been a sweet summer for Jim Wright.



AT SIXTY-FIVE, JIM WRIGHT IS AT THE PINNACLE OF HIS POLITICAL career. By Democratic standards, his first year and a half as speaker of the House was enormously successful. He pushed through piece after piece of legislation that had drawn fire from the Reagan administration, including the highway bill, a homeless bill, and the highly controversial trade bill. In regard to arms control, Wright provided the leadership necessary to get five different arms control initiatives passed in the House last year, prompted negotiations that resulted in arms control legislation being signed into law. By Republican standards, Wright’s first term as speaker was, to say the least, a learning experience. When Wright flew to Nicaragua and brokered a cease-fire offer with President Daniel Ortega, Republicans accused the speaker of usurping the power of both the president and the secretary of state.

Either way, with the ethics investigation nipping at his heels, Wright can’t relax and savor the accomplishments of his First term as speaker. None of the complaints against Jim Wright warrant criminal charges; they are rules violations. Yet the allegations, mostly of the I’ll-scratch-your-back-you-scratch-mine variety, make Wright look sleazy-and antiquated-whether he is or not. And that alone threatens his power.

Most political observers characterize Wrighl as one of the last surviving students of the LBJ school of political horse-trading, a man out of step with modern political ways, a man of another era. His way is decidedly old-fashioned, even corny. He’s a caricature of the flesh-pressing, baby-kissing, flowery-talking, back-room-dealing politician. But that’s only half of the Jim Wright story, says one of Wright’s close friends, who admits he’s old-fashioned but adds that Wright has “a 21st-century vision.” A look at just a tew Texas projects Wright recently has supported shows why even his enemies respect his power:

●Wright and Senator Lloyd Bentsen aregiven the primary credit for securing $100million in federal funding for Austin-basedSematech, the nation’s first semiconductormanufacturing consortium jointly supportedby private industry and government. President Reagan had recommended that Sematech receive only $45 million in fiscal 1989,but Wright helped to more than double thefunding. Sematech is a major economicdevelopment coup that is expected to spawnmany new high-tech businesses in Texas.

●Wright has been extremely influential inkeeping Texas in the running for the Department of Energy’s $4.4 billion Superconducting Super Collider that is estimated to bring3,000 new jobs and a $200 million-a-yearcash infusion to the area where it is built.

●Wright continues to help Fort Worth-based Bell Helicopter Textron Inc. fight thedefense budget battles for the V-22 Ospreytilt-rotor aircraft. If Bell builds the high-techplane, which takes off, lands, and hovers likea helicopter, the project could generate asmany as 6,000 jobs.

●In a lean budget year, Wright took flakfor fighting for and winning $25 million infederal funding for the Alliance Airportproject, me centerpiece of a 2,500-acre industrial project in far north Tarrant Countybeing developed by The Perot Group andheaded by Ross Perot Jr. The industrial /general aviation airport is expected to lure relocations of many aviation-related businesses.

Jim Wright has a long history of attracting major federal projects to this area. An often-cited ten-year-old study by the University of Michigan shows that Wright’s Fort Worth district, which he has represented since 1954, got a higher return on tax dollars (in terms of government contracts issued to local defense companies) than any other district in the nation. Indeed, Wright is something of a legend when it comes to bringing home the bacon. But since June 10, more of his time has been spent fighting for his reputation rather than for Texas causes. Conservative Ross Perot Jr. is just one Wright defender who views the ethics probe as an unfortunate distraction from that pursuit, Perot joins a growing number of observers who say Texas needs to divorce Jim Wright’s politics from his clout and realize that Wright’s power in Washington and parochial attention are desperately needed right now. Given the potential loss of Lloyd Bentsen in the Senate if the Dukakis-Bentsen ticket wins in November, Jim Wright’s influence in Congress may be needed even more.

Perot’s experience with Wright is typical of many who have approached the speaker for help. Though Wright is one of the most powerful politicians in the country, he has remained extremely accessible to people in the Dallas-Fort Worth area-people with problems to solve and causes to promote. Perot met Wright at a barbecue/groundbreaking for the new Fort Worth currency plant (another Wright-influenced federal project) on April 25, 1987. He gave the congressman a helicopter tour of his company’s property. Perot says Wright followed through and helped win FAA approval for the project, then worked to secure federal funding.

During the hashing out of the federal budget, the Perot airport was commonly referred to by critics in the national press as an unnecessary chunk of political pork for Wright’s home district. But the criticism proved to be short-lived after Federal Aviation Administrator T. Allan McArtor, a Reagan appointee, began to stress the need for new airport construction in this country.

“I think he [Wright] has a lot of guts.” Perot says. “If he believes in something, he stands for it no matter what. He takes a lot of flak, but it doesn’t seem to bother him. And you have to admire that. I don’t think anyone can argue he’s not good for this area. I think the shrewd Republicans and the shrewd Democrats realize that.”

Voices of support continue to surface, punctuating the cacophony of Wright criticism. Texas Republicans in the House, in their silence, continue to stand behind Wright. The lone Texan to sign the letter accompanying Gingrich’s complaint was Rep. Dick Armey of Lewisville, a right-wing maverick who often finds himself in a minority.

Some of Wright’s Republican constituents went further than others in showing their support. In late June, Vernon F. Minton, a Republican and a stockbroker who says he has voted against Jim Wright, bought a $3,000 ad in the Fort Worth Star-Telegram to say “1 support Jim Wright. .. and I don’t care how many books he sells,” referring to Wright’s book Reflections of a Public Man, which is central to the ethics probe. Others are less exuberant but still supportive. Says one Fort Worth Republican active in civic projects, “Generally, Wright can be very embarrassing, but we have to tolerate him, we have to stand behind him because of what he does for Fort Worth.”

Former Dallas mayor Jack Evans is another strange bedfellow of Wright’s. Evans, who has worked with Wright on the super collider project, says he respects the office of the speaker and realizes the opportunity it presents to this area to have a Texan in that seat. “Anyone would be foolish not to be supportive of Wright,” Evans says.

But it seems Wright never completely escapes criticism, even from within his own party. Former Democratic Party chairman and Dallas attorney Bob Strauss, one of Wright’s advisers, has said that Wright brought some of this mess on himself by exercising bad judgment in business dealings.

THOUGH THE ALLEGATIONS REGARD-ing Wright’s finances continued to draw the most press coverage throughout the summer, political insiders agree that the subject most likely to occupy the ethics inquirers is Wright’s involvement in savings and loan regulation matters. And this is where the ethics committee is likely to learn just how much Wright’s involvement in S&L matters has been distorted-both in the press and by Gingrich’s cronies. Certainly, those allegations are foremost on the minds of those keeping a close watch on Texas’s economic recovery. The savings and loan problems-and their ultimate solution-stand in the way of any significant turnaround in Texas. Wright has proven he can be influential, but the heat from the current ethics probe has many people tearing that Wright will stay aloof from the state’s S&L problems in the months to come.

Gingrich and his gang have accused Wright of calling off the dogs-namely former Federal Home Loan Bank Board Chairman Edwin Gray-to save friendly constituents, including fallen S&L owners Don Dixon, the infamous high-flyer of Ver-non Savings and Loan Association, and Tom Gaubert, a major Democratic fundraiser and former finance co-chairman of the Democratic Congressional Campaign Committee. Much has also been made of Wright’s assistance to Dallas real estate syndicator Craig Hall. It was with Hall, the ethics committee will learn, that Wright’s S&L involvement began *

Hall says he met Jim Wright for the first time on September 3, 1986. A friend had suggested that Hall visit Wright to discuss the problems Hall was having with Edwin Gray, as well as with Gray’s policies, which Hall and others felt were adversely affecting real estate borrowers and lenders in Texas.

Hall told Wright that from December of 1985 until June of 1986, he had been renegotiating loans on about $600 million in real estate, primarily with lenders who were already insolvent and being either directly or indirectly controlled by the Federal Savings and Loan Insurance Corporation, an arm of Gray’s bank board. On June 17, Hall and one of the largest of those lenders, Westwood Savings Association of California, each signed a letter of intent that outlined a loan workout. Hall wired Westwood a million dollars to seal that agreement. But soon after the government accepted Hall’s money, Westwood began foreclosure on Hall’s properties. Later, in litigation, Hall found that a special representative to FSLIC as conservator of Westwood had reneged on the agreement because “he had simply changed his mind,” Hall says. From June until that September, when Hall went to see Jim Wright, he had been trying to talk to the man who had the answers-Ed Gray.

“At that time,” Hall says, “I had some very prominent local and state Republicans helping me, including [Dallas Congressman] Steve Bartlett, who happens to be on the banking committee. I wrote sixteen letters to Ed Gray and never got an answer.”

It took Jim Wright to get Gray’s attention.

Hall says that in his meeting with Wright, he explained his own problems and then told Wright that Gray’s hard-line foreclosure policy threatened to make the real estate depression in Texas much, much worse. Hall and many other real estate investors in Texas felt that Gray’s rush to reality-making real estate borrowers pay in full or give up their property, then showing on the S&L books the “real” worth of that foreclosed property-would only cause an enormous deflationary spiral.

Hall says he told Jim Wright that Gray’s no-forbearance, “pay or die” policies could cause Texas real estate prices to plummet even further. As FSLIC closed S&Ls and foreclosed on delinquent borrowers, Texas real estate owners and other lenders began to fear the dreaded dumping syndrome- wherein FSLIC would hold fire sales to get rid of the mounting real estate on its books. That meant buyers of cheaper FSLIC-owned property could afford to slash rents, driving other owners out of business. Then those owners would become delinquent on their loans and their S&Ls would foreclose, causing problems for those lenders. FSLIC would then come in, shut down those S&Ls, and the whole dismal merry-go-round would begin again.

Following his meeting with Hall, Wright sent his advisor and friend of twenty-five years, real estate investor George Mallick, on a fact-finding mission. Mallick began to round up people in the real estate business: appraisers, property owners, and S&L owners. He set up a luncheon at the Ridglea Country Club in Fort Worth. What began as a meeting for fifty turned into a meeting of 150, Mallick says. People came from Fort Worth, from Dallas, from Arkansas and Louisiana. And Jim Wright listened. He heard stories about Ed Gray’s administration from every angle, reinforcing what he had heard from Craig Hall. Then Wright called Gray and asked him to look into Hall’s situation.

The bulk of the criticism aimed at Wright centers around his having intervened with Gray for the benefit of individual constituents. Wright does believe that one of the prime functions of a congressman is to help citizens deal with the bureaucracy, but he maintains that was never the case when it came to this S&L matter.

“It would have been an enormously costly thing for the government and it would have sent shock waves of panic through the whole economy if Craig Hall, with more than a billion dollars in real estate loans, had collapsed,” says Wright. “It would have involved 10,000 coinvestors, and it would have meant that the government or somebody would have had to take over 25,000 rental units, which it didn’t want and it didn’t need. So I talked to Ed Gray.”

As it has been reported, just talking to Gray got little done, so to get his attention, Wright held up the $15 million FSLIC recapitalization bill until he had some assurances that Hall’s situation would be handled effectively. As the story goes. Gray desperately needed the recap money, since FSLIC was quickly becoming insolvent as it closed S&Ls and paid off depositors. But that is only part of the story. Wright’s hold-up of the recap bill was never that simple. Wright wasn’t the only congressman who had been hearing “Ed Gray” stories from his constituents. Rep. Tony Coelho, a Democrat from California, also had a phone ringing off the wall with complaints against Gray. He says the move to hold up the recap bill was a result of a general lack of confidence-by Republicans and Democrats across the board-in Ed Gray and his policies. If Congress gave Gray the $15 million he wanted, people were worried he would use that money to quicken his pace of shutting down S&Ls and cause the avalanche in real estate prices that Hall and others had feared. The understanding was, Coelho says, that if Gray would step down, the $15 million recap bill would go through immediately.

S&L insiders agree. L.L. Bowman, who was commissioner of the Texas Savings and Loan Department during the recap crisis, says the holdup of the bill was inevitable-Craig Hall or no Craig Hall.

“There was so much infighting between members of Congress, the Federal Home Loan Bank Board, and committees of the U.S. League of Savings Institutions about the amount of the recap, the types of forbearances to be attached to the bill, and other specific language in the bill, that I find it hard to believe that any speedy action was going to take place regardless of the speaker’s position,” Bowman says.

Members of the ethics committee, though, are only now beginning to hear the full story about Jim Wright’s involvement in S&L matters. Several of the newspaper articles that Gingrich mass-mailed and that he relied upon in his request for the ethics committee investigation had the story severely discom-bobulated. The most celebrated of these articles was a piece that first appeared in the December 1987 issue of Regardie’s. a Washington business magazine, and was later reprinted in Bankers Monthly and the Texas Observer.

The article, titled “The Speaker and the Sleaze,” inaccurately stated that Wright held up the recap bill for “sleazy” Vernon Savings owner Don Dixon. whose extravagant lifestyle and questionable business practices have been well documented. Dixon faces civil racketeering charges related to his S&L and is being sued by FSLIC for $540 million in damages. The article stated that Wright changed his stance on the recap bill on April 28, just a day after the Dixon lawsuit was filed, to distance himself from Dixon. But Wright had actually voted for the recap back in October. Wright maintains that he changed his stance only after he received assurances that Gray would be replaced, which he later was by current bank board chairman Danny Wall. And though the article implied a close relationship between Dixon and Wright, Wright says he spoke with Dixon for the first and only time in November of 1986. Wright says Dixon came to him by way of his friend Tom Gaubert, who also needed his help.

“Tom had been deposed from ownership of his savings and loan,” Wright says, “and he felt it had been done illegally and unfairly.” Wright says he asked Gaubert why he hadn’t talked to Ed Gray about it-and once again, he heard that Gray wouldn’t talk.

“I called Ed and said ’Why don’t you talk with Tom and hear his side of the story?’ And that’s all I asked,” Wright says.

Wright also feels wronged by the insinuations about Dixon.

“In the other case, the celebrated case of Don Dixon and Vernon Savings, I do not know Don and probably wouldn’t know Don Dixon if he were to come in today,” Wright says. “But he called me up and said that his business was about to be closed by the regulators and if he could have just a few days, he had located a source of financing, someone in Louisiana I think he said, who could take his non-performing notes and give him the financing necessary to let him keep his business functioning.”

Wright says he called Gray and explained the situation. In the end. Dixon and Gaubert both lost their S&Ls anyway.

Wright says in the course of a year he ’ literally gets thousands of such calls from ; constituents. In an average day. he says, his | office receives about 220 letters, about 40 percent of them involving some problem , citizens have encountered with the federal bureaucracy. Wright says he’s still looking for a horse that a constituent loaned to the Army at Fort Bliss back in 1941. “If you see one,” Wright says, in mock seriousness, “it ! was a blood bay horse that stood fifteen and a half hands high with a white forehoof.”

But in Texas these days, the particular bureaucracy that plagues many of Wright’s constituents is the Federal Home Loan bank- | ing system, formerly Ed Gray’s turf. And in that ballpark. Wright is not alone. Steve Bartlett says he gets those calls, too.



SINCE THE BEGINNING. THE WRIGHT war has been characterized as “the battle of leaks” because it began when Ed Gray leaked bank board information on Gaubert’s and Dixon’s savings and loans to columnists Jack Anderson and Jane Bryant Quinn. Gray, who is described by one former bank board staff member as having ! a “poor financial aptitude,” is commonly analyzed as a man unqualified for and ineffective in the bank board post: he worked in public relations at a savings and loan, as a newspaper reporter, and as a press secretary for Ronald Reagan when he was governor of California. But Gray was effective when it came to using the press to divert attention from bank board problems to Jim Wright. Gray, who took a job in the private sector, has remained unavailable to the press.

And speaking of dirty politics, Wright supporters maintain that Gray isn’t the only Republican trying to divert heat from one party to another. Wright’s close advisers believe that the Gingrich assault is only a ploy to draw attention from the ethical trespasses of Reagan appointees such as Ed Meese. They believe that a conspiracy is afoot, and they have some evidence that lends credence to that theory. Wright loyalists are trying to track down four Dallas attorneys who, they believe, worked with Gingrich by supplying information on Wright’s finances and political dealings. Sources say the attorneys are being paid by a wealthy Dallas Republican, a Bush backer who believes bringing down the speaker of the House will even the sleaze count between Republicans and Democrats.

And there are many questions about the involvement of Common Cause, the political watchdog group that helped Gingrich get the ethics investigation going. Insiders say that Common Cause had looked into Gingrich’s allegations once before and had decided not to take action. Then, in May, Common Cause abruptly changed its stance. Though the group usually brings major issues to its board of directors for approval before taking action, it called for an investigation of the speaker of the House without going to its board. Since the investigation was formally announced, Common Cause has been strangely silent, dodging calls from the press. Insiders speculate that the group has its own agenda: it has been losing members and limelight of late and may have stepped forward in an effort to draw attention-and financial support-to itself.

Questions remain, and many will no doubt be answered this month. But regardless of what comes of the ethics probe, a growing number of Texans are wondering how this negative attention will affect Jim Wright, the man Texans could call and count on to get something done. Will Wright back off from the S&L issue? Other congressmen certainly have, says former S&L commissioner Bowman, adding that “some members of Congress felt that any bank board issue was too hot to touch” during the Gray-Wright clash. And most have remained hushed on the subject, except to lash out at Texas as the culprit in the quagmire of failing thrifts.

But given that the Federal Home Loan Bank Board now projects that it will need to raise $42.5 billion during the next decade to deal with the S&L crisis, it’s inevitable that Congress will again be asked to recapitalize a weakened FSLIC. Without Jim Wright in Washington-and fully empowered-the Texas-bashing could get brutal. News that Texas thrifts contributed $3.5 billion to a $3.8 billion loss nationally in the first quarter of 1988 gave critics ample ammunition. But Wright knows that blaming Texas is the easy way out of a difficult situation. His understanding of the S&L problem and the regional recession will be crucial in any upcoming debate regarding another recapitalization. Without Wright’s influence, many fear Texas will be made to bear the brunt of what has become a national problem.

And as the regional recession drags on, Wright supporters worry that without his benevolent influence, the anti-Texas mood in Congress may extend from the S&L crisis to Texas in general, choking off the faucet of federal dollars that Wright kept flowing to this area for more than three decades-just when Texas needs them most.

But at sixty-five, it’s doubtful that the highest ranking Democrat in the country will change his ways. Wright believes in his role as ombudsman for his constituents. He says as far as he is concerned the problems of Craig Hall, or Don Dixon, or Tom Gaubert are no more important than the problem of a much less affluent constituent who came to him experiencing trouble with Ed Gray’s administration. The woman’s problems didn’t make the front page of the Washington Post or Regardie’s.

Wright says this woman had faithfully paidthe mortgage on her home for eight years.Her husband had lost his job through no faultof his own, and as a result they had missedtwo house payments. The S&L was going toforeclose because the regulators had handed down a mandate of no forbearances. Onceagain, Jim Wright picked up the telephone tohelp a constituent. A growing number ofTexans hope that as long as he’s in Congress,he’ll continue to do just that.

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