A spanking from Schaefer

Frank A. DeFilippo

December 24, 1992|By Frank A. DeFilippo

WITH a boss like Gov. William Donald Schaefer, John A Donaho doesn't have to worry about big insurance companies kicking him around. The governor will do their dirty work every time.

As Maryland's insurance commissioner, Mr. Donaho is used to scuffling with the big guys in the policy-selling business. But this time the pin-stripers went over his head directly to the Big Cheese himself. And the result was a humiliating Dutch-uncle scolding, in public yet, for the very man Mr. Schaefer once called the best insurance commissioner in the country. Go figure.

Oh, everybody knows Mr. Schaefer's idiosyncratic, even borderline cuckoo at times. But what seems to have irked the governor is not so much that the commissioner's doing his job (and doing it well); it's that -- ready for this? -- he's doing it on television, and doing it in a state where nobody with official rank is allowed to log more air time than the gonzo Mr. Schaefer himself.

"If he gets . . . back to running the insurance business, then I'll be fine," Mr. Schaefer said. "But otherwise, appearing before Congress and becoming a television star . . ."

The truth is that Mr. Donaho was responding to a subpoena from a committee of the U.S. Senate, an invitation that's a tad more compelling than being part of the wallpaper at one of Mr. Schaefer's big-ticket fund-raisers.

Mr. Donaho admits that he's considered a "loose cannon," probably by some actuarial snots in the insurance business.

Yet here was the state's loose cannon-in-chief appearing to support the criticism of Mr. Donaho for performing a public good deed by warning us that Blue Cross and Blue Shield of Maryland was in danger of sliding into the same sinkhole as the savings and loan industry.

The Blues had the best board of directors money could buy. And they wound up being patsies for the disastrous policies laid down by their well-compensated executives.

The Blues, it seems, were on the same wicked tear that brought down S&L swindler Jeffrey Levitt's house of toothpicks. They're an industry that's supposed to minister to the sick and the ailing. But they were behaving like a bodacious Donald Trump in the '80s: an executive skybox at the ballpark; junkets to the Olympics; lavish entertaining; investments in business ventures they knew little about; millions in legal fees to outside law firms and consultants; and most offensive of all, multi-million-dollar golden handshakes for departing executives.

Worse, the Blues got caught cooking the books. They inflated their cash reserves far beyond the loose change they actually had in the cash drawer after the giddy spending spree was over. As a result, the Maryland Blues were ranked among the six wobbliest in the nation along with the District of Columbia's Blues. (Let it be noted, too, that the West Virginia Blues actually ,, did collapse.)

Even Frank A. Gunther Jr., a sidekick of Mr. Schaefer's who assumed the Blues chairmanship after Carl J. Sardegna was elbowed out, supported Mr. Donaho's findings before the Board of Public Works.

As a result of Mr. Donaho's regulatory prod, Mr. Gunther said, the Blues are correcting many of the misdeeds that the insurance commissioner had uncovered.

Yet Mr. Schaefer insists that Mr. Donaho's action "shakes the confidence of all of us in Blue Cross/Blue Shield . . ." You're damned right it does, governor.

Because once before Marylanders were assured by their governor and his pencil-neck regulators that the savings and loan business was sound and secure. Funny thing about that. We're still paying the tab for the bailout. So Mr. Schaefer should be thankful that Mr. Donaho is alive and alert, unlike the sleepwalkers who allowed the plundering and pillaging of Old Court Savings and Loan (and others).

It's one thing to be bullish on business. It's another to be a bully in public. Decapitating an underling is the kind of behavior that's usually reserved for the woodshed, not the governor's reception room before the very people he regulates.

But Mr. Schaefer's funny that way. He believes that what's good for business is good for Maryland, period, no matter who or what gets in the way. He has, for example, frequently upbraided Atty. Gen. J. Joseph Curran Jr. for his aggressive pro-consumer policies, claiming they give Maryland an anti-business image.

Despite Mr. Schaefer's bully-boy manners and his decidedly pro-business paranoia, Mr. Donaho insists, "Instead of hurting the Blues, I have helped them." He's right. And for this he gets a kick in the shins from his bellyaching boss.

Every other Thursday, Frank A. DeFilippo writes a column on Maryland politics.

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