Baltimore banker H. Grant Hathaway has resigned as a director of the Federal Reserve Bank of Richmond and as the Maryland Republican Party's financial chairman in the wake of an accusation that he violated the Fed's policy against political activity.
Hathaway, vice chairman of MNC Financial Inc., said he resigned both posts to avoid the appearance of a conflict of interest.
"We believe there is no conflict of interest," MNC Financial spokesman Daniel G. Finney said yesterday. "But he [Hathaway] doesn't want to add any more adverse publicity to a company that's suffered enough from that" as the result of recent operating losses, stockholders' lawsuits and a massive reorganization.
Rep. Henry B. Gonzalez, D-Texas, accused Hathaway of violating the Fed's political activities policy in a May 20 letter to Alan Greenspan, chairman of the Federal Reserve Board of Governors. The policy bans Fed directors from serving as officers of state political parties or party committees.
Gonzalez, chairman of the House Banking, Finance and Urban Affairs Committee, learned of the alleged policy violation in a comparison of information contained in a 1990 committee survey of Fed directors and a 1989 annual report of outside activities that MNC Financial filed with the Fed, according to a committee source.
The papers show that Hathaway reported his GOP office to the Fed, but failed to report it on the committee survey.
Hathaway said the omission was "inadvertent," and said he knew nothing of Gonzalez's letter to Greenspan.
Hathaway, who also is president and chief executive of Maryland National and American Security banks, said he thought it would be "cleaner" to resign the Fed and GOP posts than to face possible adverse publicity about the alleged conflict of interest.
Hathaway was on the Baltimore branch board of the Federal Reserve Bank of Richmond for 5 1/2 years. His term would have expired next December.
He has been the GOP's financial officer in Maryland for about two years.
Hathaway said he misunderstood the committee's questionnaire, which requested information about his current business affiliations and memberships of boards of "other banking and nonbanking organizations," because it didn't specifically ask for information about his political activities.
"It just completely skipped right by me," he said.
Hathaway also said he misunderstood the Fed's ban on political activity. "I thought it applied to elective offices," he said.
Hathaway said he resigned his GOP post immediately after he learned of his omission on the survey, about 1 1/2 weeks ago. He said he resigned from the Fed board last Thursday.
A Fed spokesman in Washington said yesterday that the resignation has been accepted.
Gonzalez called Hathaway's survey omission "very disturbing."
"I cannot understand how Mr. Hathaway's political affiliation could have escaped the notice of the Federal Reserve," the congressman said in his letter to Greenspan.
He said the Fed's failure to notice Hathaway's GOP position suggested "selective" enforcement of a longstanding Fed policy against such activities.
The committee source said yesterday that Greenspan has not responded to Gonzalez's letter.