Report urges end to tangled U.S. S&L, redwoods case
By Andrew Clark
WASHINGTON, June 15 (Reuters) - A congressional report has urged U.S. bank regulators to drop their long-running lawsuits against a Texas financier, saying they were improperly used to try to win government control of thousands of acres of California redwood forests.
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The staff report prepared for the House of Representatives Resources Committee said the suits were designed to pressure Houston-based Maxxam Corp. (AMEX:MXM - news) and its chairman and controlling shareholder, financier Charles Hurwitz, into giving a grove of redwood trees to the U.S. Interior Department in a ``debt for nature'' swap.
Maxxam said the report was a welcome vindication.
The Federal Deposit Insurance Corporation (FDIC) and the Office of Thrift Supervision (OTS) brought actions against Maxxam and Hurwitz in 1995, seeking hundreds of millions of dollars over their alleged role in the $1.6 billion collapse in 1988 of the United Savings Association of Texas.
Maxxam, Hurwitz and a number of Republican lawmakers said the cases were driven by the administration of former President Bill Clinton and environmental groups to force the company to settle by ceding thousands of acres of redwoods in California's Headwaters Forest to the government.
``EXTORTION'' CLAIMED
``In short, banking regulators provided the otherwise unavailable leverage for a federal plan to extort privately owned redwood trees,'' the report, dated June 6, said.
``The directors of the FDIC and OTS should take corrective action and withdraw the authorization for the ... lawsuit(s).''
MAXXAM said Hurwitz was delighted with the report, and was hopeful that the agencies would decide to end their claims.
``It confirms what we have said for years - that this is politically motivated, it's abusive and outrageous and it should never happen again,'' MAXXAM spokesman Josh Reiss said.
Officials at the agencies had no immediate comment, but have repeatedly insisted -- including at hearings held by the Resources Committee last year -- that their only motivation is to recover taxpayer funds used in the savings and loan cleanup.
Unusually, the report was not released by the committee, but instead was placed in the Congressional Record on Thursday by California Republican Rep. Richard Pombo. A committee spokeswoman had no comment.
The panel initially set up a task force in August to look into the case, but its authority expired when the previous congressional session came to a close. The new report was prepared to ``wrap up some of the oversight work,'' Pombo said.
Democrats refused to participate in the task force or hearings, calling them one-sided, and they questioned both the provenance and findings of the latest report.
REPORT CALLED ``QUESTIONABLE''
``To represent this in any way as an official committee report is very questionable,'' a Democratic staff member said. ``The Majority here is effectively litigating the case on behalf of Mr. Hurwitz, and we have no grounds to do so.''
But former Resources Committee Chairman Don Young, who launched the initial probe, said it was the regulators who were on shaky ground, calling them ``clearly out of control.''
``The FDIC and the OTS had no authority in law to try to leverage redwood trees, but they did it anyway,'' the Alaska Republican said. ``Then they came before the committee and denied their claims had anything to do with redwood trees.''
The plan was drawn up by environmentalists, who successfully put the idea into The White House, the report said. It cited a letter from former Clinton Chief of Staff Leon Panetta to the Audobon Society, an environmental group, in which he writes the idea of swapping the debt for the trees is ``worth pursuing.''
The report blamed the regulators for keeping the claims against Hurwitz alive for political reasons.
``Intense political pressure, intense environmental lobbying, and White House pressure to pursue the banking claims as leverage for redwoods outweigh the standard operating procedure to close the OTS case,'' the report concluded.
(additional reporting by C. Bryson Hull in Houston) |
