Cranston says lincoln charges are 'ridiculous'

Sen. Alan Cranston (D-Calif.), defending himself after weeks of silence about his efforts on behalf of Lincoln Savings & Loan, declined Tuesday to blame anyone--including owner Charles

H. Keating Jr.--for the $2-billion collapse of the Irvine thrift. In an interview, Cranston characterized allegations of wrongdoing by him as “ridiculous” and expressed hope that the

controversy will be laid to rest before he seeks reelection in 1992. But he acknowledged that the matter already has diverted his attention and has interfered with fund raising for his

reelection drive. “I know my opponent will resurrect it,” he said. “Obviously, my opponent will have an unpleasant 30-second television spot about it.” Until now, Cranston has declined to be

interviewed while the House Banking Committee conducted six weeks of hearings that focused increased attention on the efforts of five senators to intervene with federal regulators on

Keating’s behalf during an early investigation of Lincoln. The 73-year-old senator said he has refused to talk about it for the past two months because he was preparing his legal response,

which was presented to the Senate Ethics Committee last week, and because he was “getting tired” of the persistent questions of reporters. In addition, he conceded he was upset by the

embarrassing testimony before House committee hearings. “Now that’s over, and I’ve had a few days’ rest and I’m ready to address it again,” he said, vowing to defend himself as aggressively

as possible in the days to come. On Monday, Cranston was asked about the Keating affair by a constituent only once during a series of forums he held in Santa Barbara--his first public

appearances in California since Congress recessed last week. He responded with a forceful, 5-minute defense of his actions that drew mild applause from the audience of about 250 persons.

Cranston and four other senators--Dennis DeConcini (D-Ariz.), Donald W. Riegle Jr.(D-Mich.), John Glenn (D-Ohio) and John McCain (R-Ariz.)--have been accused of interfering with a federal

investigation of Lincoln in exchange for thousands of dollars in political contributions from Keating, a wealthy Arizona businessman. The four-term California senator rejected the statements

of three elderly California women who had told the House Banking Committee that they hold him personally responsible for the losses of $200 million suffered by 24,000 investors who

purchased insured junk bonds at offices of Lincoln. The bonds are now worthless and investors are suing Keating for repayment. Cranston said he is not responsible either for the fraudulent

bond sales or for the collapse of Lincoln last April, which is expected to cost the American taxpayers $2.3 billion to repay insured depositors. “It’s all ridiculous,” he said, referring to

their efforts to blame him. At the same time, Cranston said he would not engage in “finger pointing” or blame others who have been implicated in the scandal--including Keating, the four

other senators, former Federal Home Loan Bank Board Chairman Edwin J. Gray or M. Danny Wall, director of the Office of Thrift Supervision, the successor agency to FHLBB. Although Keating

currently is under investigation by the Justice Department and the Securities and Exchange Commission for his stewardship of Lincoln, Cranston said it is too early to judge whether the

Lincoln owner did anything wrong. “We’ll have to wait and see,” he said. The senator said he still believes that Lincoln was being unfairly harassed by federal regulators in 1987 when he

contacted Gray at Keating’s request. He added that Keating never asked him to do anything as a “quid pro quo” for his generous contributions. Nor would Cranston join in the chorus of

Democrats in Congress--including Senate Majority Leader George J. Mitchell (D-Me.)--who are calling on President Bush to oust Wall as the nation’s chief thrift regulator for his failure to

act sooner to halt the alleged fraud and mismanagement by Keating at Lincoln. Rather, Cranston said Wall deserves credit for deciding last April that the federal government should seize

Lincoln to stop the loss of federally insured deposits. “He’s the one that finally took matters into his own hands in Washington and found the evidence that he felt was needed and made a

decision,” Cranston declared. But the senator’s vow to avoid finger pointing was sorely tested when it came to the subject of Gray, who has been his chief accuser. Gray, who met with the

senators in April, 1987, when he was head of the bank board, has accused them of improperly trying to influence the investigation of Lincoln. Cranston said Gray shares “some culpability”

because he headed the bank board at the outset of the investigation of Lincoln. The senator’s aides have speculated that Gray, a former press secretary for Ronald Reagan, is trying to get

even with Cranston for his criticism of the former California governor and President dating back to 1966. The senator expects to be cleared of any wrongdoing by the Senate Ethics Committee.

“I expect they will find that I did nothing improper--that I violated no rule, no law,” he said. And he predicted that the panel’s findings would help him get beyond the scandal by the time

he faces reelection. “This may go away by then if the Ethics Committee comes out with the sort of decision I anticipate and if my message gradually gets through,” he said. Cranston plans to

run an effective, well-financed reelection campaign, even though the Keating case already has “diverted my attention” away from fund raising, he said. “It’s slowed down a bit,” he said of

his recent fund raising, “but we’ll be in good shape . . . And some people have contributed to me because of this--because they want to show friendship.” Cranston’s defense of himself is

based primarily on the testimony of both Gray and Wall, who told the House committee that the senators’ intervention did not affect their handling of the Lincoln case in any way. He insists

that he never asked the regulators for leniency for Lincoln but only requested that the probe of Lincoln be brought to a speedy conclusion. “When you are asking them to make a decision, how

can you be blamed for the fact that they didn’t make a decision,” Cranston asked. He also argued that members of Congress are expected to intervene with the government on behalf of

constituents who have a legitimate complaint about bureaucratic red tape. This, he said, is no different than what former President Reagan often promised to do--”to get government off the

backs of the people.” Cranston said he did not know at the time he contacted the regulators for Keating that worthless junk bonds were being sold at Lincoln offices to many people who

mistakenly believed their investment was insured by the government. He said he did not learn about the bonds until earlier this year. Even when Lincoln was seized by the government last

April 14, Cranston admitted, he told Wall he feared the regulators were making “a mistake.” He said he felt the government should have permitted Keating to sell Lincoln. “I would do most of

what I did again, knowing what I knew at the time,” he said. “In hindsight, I wouldn’t do it if I had known all the facts. But given what I knew at the time, I think it was the appropriate

thing to do.” MORE TO READ