Clinton aide runs firm being sued over S&L failure

November 18, 1992|By Los Angeles Times

WASHINGTON -- As President-elect Bill Clinton prepares to make the savings and loan cleanup a key issue in his administration, a top adviser to his transition is embroiled in a $535 million lawsuit with the federal agency handling the thrift crisis.

The adviser, Thomas F. "Mack" McLarty, a childhood friend of Mr. Clinton's who sits on the president-elect's transition board, is not charged with any wrongdoing in the suit filed by the Resolution Trust Corp.

However, the RTC suit alleges that Mr. McLarty's company, Arkla Inc., is ultimately responsible for the "misdeeds and negligence" that occurred in the operation of University Savings of Houston, which was seized by federal regulators in 1989.

The RTC contends that Arkla must shoulder its share of the blame because a company acquired by Arkla had owned University when the thrift was making questionable loans and dubious financial judgments.

Mr. McLarty, chairman and chief executive officer of Arkla, has denied that his company has any responsibility for the failure of the savings and loan, which the RTC has estimated could cost taxpayers $2 billion.

As a member of the eight-person board of directors for Mr. Clinton's transition, Mr. McLarty is in a position to influence key Clinton decisions on RTC personnel and policies -- a topic the president-elect has said is a major issue.

Matters relating to the RTC have not yet come before the transition board, which met with Mr. Clinton yesterday in Little Rock, Ark., to consider personnel and policy issues, according to the transition press secretary, Dee Dee Myers. In the meantime, Mr. McLarty has not decided whether to remove himself from involvement in RTC-related issues.

"These issues have not come up yet in the board meetings. It's a legitimate issue. It's something we will take seriously and will apply appropriate standards to," Ms. Myers said. "We're committed to avoiding both conflict and the appearance of conflict of interest."

But Mr. Clinton, who has often turned to Mr. McLarty for advice, clearly has had RTC issues on his mind. Clinton communications director George Stephanopoulos described the RTC yesterday as "one of the issues the governor is reviewing right now."

Any review of RTC practices would include the agency's litigation policy. In cases like the one involving Mr. McLarty's company, there has often been litigation against so-called "deep pocket" defendants to try to recoup some of the government's expenses in the S&L bailout.

Arkla's involvement with University Savings began in 1988, when it acquired a company named Entex, which distributes natural gas.

Entex had owned University from 1977 to 1987.

Federal regulators seized University in 1989 and filed suit in February of this year, charging negligence and misdeeds in connection with the operation of the thrift.

The RTC filed an amended complaint last month, adding Entex and Arkla as defendants.

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