St Germain Assails Bank Board, Will Pursue FCA Probe : Committee Chairman Wants Information on Rescue Effort

Accusing federal regulators of secrecy and stonewalling, House Banking Committee Chairman Fernand St Germain (D-R.I.) said Tuesday that he will press his investigation of the Federal Home Loan Bank Board’s campaign to find a buyer for crippled Financial Corp. of America.

An angry St Germain said the bank board, in its eagerness to find a buyer, had been persistently ignoring his requests for information about Irvine-based FCA. The company’s operating subsidiary, American Savings & Loan, with almost $34 billion in assets, is the nation’s second-largest savings and loan association.

St Germain, in an unusually blunt statement, warned the bank board to “wake up and face the fact that the committee will carry out its oversight responsibility.”

“There are ways around the stone wall,” St Germain said in a speech on the House floor.

Talking With Bass Family

If bank board officials do not respond to St Germain’s insistent request, committee sources said he is likely to ask the committee to subpoena documents and records about FCA.

The bank board is now negotiating with the Robert M. Bass group, a family of private investors in Ft. Worth, for a financial rescue of FCA, whose net worth was wiped out by a huge loss of $468 million in 1987.

The general terms of the rescue package call for the Bass group to provide $500 million in new capital for FCA, with promises by the bank board to take responsibility for a significant share of the bad loans in the FCA portfolio.

The bank board has declined to make any precise details public while the talks are under way. It is also refusing to share the information on a confidential basis with members of Congress and their staffs, maintaining that any leaks might cause the publicity-shy Bass family to become angry and walk away from the deal.

Wants ‘Timely Answers’

“We understand the chairman’s concern and the committee members’ desire to exercise their oversight responsibilities,” bank board spokesman William Fulwider said Tuesday. “We hope they would understand we really are trying to reach a good solution for the problem.

“We cannot go into detail because we are in a sensitive stage in the negotiations. It is extremely important the negotiations go on, with a minimum of information being given out at this point in time.”

Rep. Richard H. Lehman (D-Sanger), whose district includes American Savings’ headquarters in Stockton, said St Germain “took the only action he could. He is trying to get timely answers.”

Until Tuesday’s denunciation of the bank board by St Germain, congressional criticism of the handling of the FCA case had been muted and private. Bank board Chairman M. Danny Wall, who served as staff director of the Senate Banking Committee when the Republicans controlled the Senate, is well respected and trusted on Capitol Hill.

Wall and Roger F. Martin, the bank board member who is negotiating the deal with the Bass Group, have asked members of Congress to be patient. They have promised to fashion an effective agreement to rescue FCA but have repeatedly refused to provide any particulars of the negotiations.

“The policies and procedures of the bank board have been shrouded in secrecy,” St Germain said in his floor speech Tuesday.

“Today marks the 96th day since I asked for a set of detailed documents. Outside of a few publicly available items and press releases--and belatedly one confidential letter--the committee has been stonewalled.”

Growing Impatience

St Germain first requested information when the bank board was talking with another suitor for FCA, Ford Motor. The proposed Ford deal collapsed in January.

The bank board regulators want to restore FCA to a sound financial condition at the lowest cost to the Federal Savings and Loan Insurance Corp., the arm of the bank board that guarantees S&L; deposits up to $100,000 and pays the costs of bailing out or shutting down insolvent firms.

“I intend to explore how FSLIC’s potential liability is calculated, what process is used to determine the proper course of action for solving a troubled institution’s problems and how potential suitors are selected and courted,” St Germain said.

He said FCA has proposed that the federal insurance corporation provide loan guarantees similar to the rescue package for Chrysler in 1979. “Is this really the cheapest way to go?” he asked.

In another sign of growing impatience with the bank board, St Germain demanded Tuesday that the regulators “immediately” dissolve the Federal Asset Disposition Assn. He said FADA, established to dispose of the real estate taken over from failed S&Ls;, was an ineffective and “wasteful bureaucracy.”

If the bank board does not cooperate, the committee will write legislation to kill FADA, St German said in a letter to bank board Chairman Wall.

The bank board’s response was a polite but unmistakable no. The request for dissolution is “premature,” bank board spokesman Fulwider said. “There’s new management” at FADA, he said, and it should be given “a chance to work.”