McMillen asks ethics word on meeting Congressman seeks ruling on his actions for failing Annapolis S&L.

November 08, 1991|By John Fairhall | John Fairhall,Evening Sun Staff

WASHINGTON -- Fearing political damage, Rep. Tom McMillen of Maryland has asked the House ethics committee for a statement supporting his position that he did nothing improper when he talked with a federal regulator last year about a failing Annapolis savings and loan.

The S&L, then called First Annapolis Savings Bank, had among its investors Edward O. Wayson Jr., who is a limited partner in one of McMillen's businesses and has contributed money to his campaigns.

McMillen has strongly defended his meeting with the regulator, Jack Ryan, a regional director of the federal Office of Thrift Supervision.

McMillen said he did not meet regulators because of his relationship with Wayson.

Wayson, an Annapolis attorney, said he has contributed "modest amounts" to each of McMillen's campaigns since 1986 and in the past performed a minor fund-raising role for McMillen. "I'm a strong supporter of Tom McMillen as a congressman, and I think he's done a great job of serving our district," Wayson said.

Wayson's attorney, Dale Cooter, said his client was one of many investors in First Annapolis, and lost his 5 percent stake when the government took over the S&L June 1, 1990, two months after McMillen's meeting with Ryan. Cooter declined to specify the dollar amount of Wayson's loss.

McMillen's meeting with Ryan was disclosed yesterday by the Washington Post. In response, McMillen issued a statement saying the article was "misleading."

"I will make inquiries to federal agencies for any constituent," he said. "This institution had thousands of depositors, employees and investors, and they were in trouble."

In his letter to the ethics committee chairman, Rep. Louis Stokes, D-Ohio, McMillen said he had no financial interest in First Annapolis and has met with banking regulators and other government officials "on behalf of numerous constituents and the state of Maryland on a variety of occasions; there was nothing out of ordinary in my meeting."

Referring to next year's elections, McMillen said in the letter that the Post article "gives my opponents all the ammunition they need to create innuendo and concern, without ever having to show that I did anything wrong."

McMillen asked the committee for a statement confirming the "contacts such as the one I made" with the regulator "are perfectly proper." He cited a section of the ethics manual affirming that a lawmaker may make contacts with agencies on behalf of constituents.

McMillen said he is providing the committee with a transcript of LTC the meeting he had with Ryan April 2, 1990. The transcript is based on a tape of the conversation McMillen said he secretly recorded to avoid misrepresentation of what was said.

Ryan told the Post he had not felt pressured by McMillen, but was "outraged" to learn he had been recorded.

Ryan refused through a spokesman yesterday to elaborate on what he told the Post. A transcript made from McMillen's tape bears out Ryan's statement that McMillen did not pressure him.

McMillen began his part of the conversation with chit-chat, noting he was in Atlanta to attend a broadcasters' convention and had "snuck out" to see Ryan. From that point on, the conversation veered back and forth between discussions of First Annapolis and of how generally the government was dealing with failing S&Ls. But most of the conversation dealt with First Annapolis, the transcript shows.

"I know that they have a big, big problem with their goodwill situation and the fact that they have to dig out of a deep hole," McMillen added. He referred to legislation, which he supported, that effectively stripped S&Ls such as First Annapolis of their ability to count as assets their "goodwill" value, in effect the value of their reputation in the community.

McMillen brought up Wayson's plan to have investors raise $12 million to save the institution from federal takeover: "I know Wayson and I know some of the management folks and I know, I think, that they could probably raise the money. . . . "

Although he demonstrated detailed familiarity with Wayson's plan, McMillen reacted with surprise when Ryan quickly informed him that the institution was effectively beyond saving because of losses it had suffered.

"Is that right?" McMillen responded.

McMillen repeatedly made the point that -- with failing S&Ls in general, and First Annapolis specifically -- it would be better if the government could somehow keep them going rather than take them over and sell them off.

The transcript indicates Ryan criticized First Annapolis' management prior to 1988 for having run up loan losses. He credited Wayson with having stabilized the S&L, but made clear it was only a matter of time before the Resolution Trust Corp., created by the government to deal with failed S&Ls, took over.

Ryan held out a sliver of hope in suggesting that if Wayson came up with "a capital plan," he might be able to negotiate purchase of the institution after it was taken over.

But apparently nothing came of the idea. The government took over the S&L in June 1990, reorganizing it under the name First Federal Savings Bank of Annapolis. Then last spring, the Resolution Trust Corp. dissolved it, absorbing losses that it was estimated would cost taxpayers more than $252 million.

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