Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 29, 1992 TAG: 9203290061
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: NEW RIVER VALLEY
SOURCE: SARA FRITZ and MICHAEL ROSS LOS ANGELES TIMES
DATELINE: WASHINGTON LENGTH: Long
Such are the roots of the House bank scandal. And it is not the traditional Washington imbroglio.
The worst offenders in the House bank case do not represent a saga of official misconduct, public corruption or misuse of office. Rather, they are actors in a tale of private weakness - of individuals enmeshed in webs of personal conduct who cut corners to escape the consequences.
Here is not the myopic government inattention to a developing national crisis that brought on the savings and loan debacle. This is no covert operation run amok like Iran-Contra. Nor does it involve under-the-table payoffs to politicians, the heart of Abscam and a host of other scandals that dot American history.
This week, when the names of the House members with the largest overdrafts are published by the Ethics Committee, the list will expose real-life stories of financial mismanagement, family trauma and career disruption that differ from the crimes and misdemeanors of other people primarily in just one respect: They involve elected officials who could turn to a highly unusual bank for ready cash whenever the pinch got too tight.
As one House Democrat explained, referring to the roughly two dozen lawmakers who wrote the biggest overdrafts: "There's a sordid side to it. Almost in everybody's case, it's someone whose life got out of control."
Not all of the House members who overdrew their accounts at the House bank were having personal problems, financial or otherwise. Many say that their overdrafts are attributable to sloppy accounting procedures at the bank, not their own mismanagement.
But a preliminary roster of major abusers, contained on a list that was leaked to the news media, includes many people whose lives clearly were in turmoil during the 39-month period examined by the Ethics Committee.
The lineup includes at least five members whose marriages dissolved, two who made a bad investment in a Bahamian island resort, three who lost elections, one with a reputation for high living, one who had invested money with the owners of a failed savings and loan, one under indictment for fraud and one who resigned because of scandal.
The publicity surrounding the House bank scandal has made many alleged abusers understandably reluctant to discuss their personal finances. Even so, a few who expect their names to appear on the Ethics Committee list freely admitted in interviews that they had problems during the 39-month period in question, which ended last Oct. 3.
Rep. Robert W. Davis, R-Mich., who went through a highly publicized divorce in 1989, acknowledged that it was the "worst financial period of my life." In his latest financial disclosure statement, he reported having no personal assets outside of his home and having debts to three lending institutions within a range of $35,000 and $115,000.
Davis was divorced from his wife, Marty, in an acrimonious legal battle. At the time, he was living with a 28-year-old woman for whom he obtained a job on the staff of the House Merchant Marine and Fisheries Committee. His wife complained publicly that she was receiving so little support from Davis that she was thinking of applying for welfare.
Like Davis, three others whose names were on the preliminary list - Reps. Mickey Edwards, R-Okla.; Charles Hatcher, D-Ga.; and Charles A. Hayes, D-Ill. - were divorced during the times they cashed the controversial overdrafts at the House Bank.
For Edwards, it was his fourth divorce - a costly and embarrassingly public affair that further weakened his already perilous financial situation. Edwards, who reported having no assets or liabilities in 1990, had overdrafts said to have totaled $54,000.
His last ex-wife, Lisa Reagan, a professional mezzo-soprano and a former Miss Oklahoma, told the Daily Oklahoman last week that whenever Edwards had to cover an overdraft at the House Bank, he would simply borrow from the House credit union, creating a growing spiral of debt.
"We had loans out the kazoo," she said.
Hatcher, whose overdrafts may have totaled $273,361, not only was divorced last May, but also underwent open heart surgery during the period under investigation. In the divorce settlement, he agreed to pay his ex-wife $20,000 in home equity and college expenses for his children.
Another recently divorced congressman, Hayes - whose overdrafts may have reached $296,681 - reported no assets in 1990 and one outstanding personal loan of more than $15,000.
A 1987 divorce also apparently exacerbated the severe financial problems of Rep. Carl Perkins, D-Ky., who is not seeking re-election in 1992. During his divorce, he caused a sensation among his constituents by telling the court that in order to maintain his lifestyle, he needed at least $23,600 a month, more than three times his congressional salary.
Perkins reportedly wrote bad checks with a face value of $565,651.
According to his financial disclosure reports, he was forced to sell the family farm and other property worth $450,000 in 1990, as well as horses, cattle and tobacco worth $80,000. While he still reported owning bank stock worth more than $250,000 and a townhouse worth at least $100,000, he had six bank loans totaling possibly as much as $300,000.
Perhaps the most unusual personal story to come out of the House bank scandal is the tale of an investment that eight members of Congress made in a tiny island in the Bahamas. Two of them - Reps. Robert J. Mrazek, D-N.Y., and Edward F. Feighan, D-Ohio - were listed among the major abusers of the House Bank.
Mrazek reportedly had $351,609 in overdrafts, Feighan $218,994.
Mrazek admitted that a $32,542 check he wrote on his House bank account to cover two delinquent mortgage payments on the island last April resulted in an overdraft. But his aides said the overdraft amounted to only $2,000 and was covered two days later.
The 17-acre parcel, known as Pierre Island, was purchased for $475,000 with the idea of turning it into a resort. But it apparently became a financial albatross for the congressmen when real estate prices declined.
Memo: shorter version ran in the Metro edition.