[Congressional Record Volume 140, Number 4 (Friday, January 28, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: January 28, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
    CONSIDERATION OF PUBLIC AND REGULATORY POLICY--MADISON GUARANTY

  Mr. D'AMATO. Mr. President, today eight members of the Senate Banking 
Committee have sent a letter to Chairman Riegle, a letter which I am 
not only going to read, but ask it be printed in the Record.
  I ask unanimous consent that that letter be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:


                                                  U.S. Senate,

                                 Washington, DC, January 28, 1994.
     Hon. Donald W. Riegle,
     Chairman, Committee on Banking, Housing and Urban Affairs, 
         U.S. Senate, Washington, DC.
       Dear Mr. Chairman: Notwithstanding the recent appointment 
     of a special counsel to investigate potential criminal 
     wrongdoing in connection with Madison Guaranty, a failed 
     savings and loan, the constitutional responsibility of 
     Congress to consider the serious questions of public and 
     regulatory policy raised by this controversy remains.
       Last December Senator D'Amato requested Committee action 
     with respect to this issue. In the intervening time, numerous 
     questions that fall within our Committee's legislative and 
     oversight jurisdiction have gone unanswered. A review of the 
     limited information that is publicly available indicates a 
     variety of germane issues that command the Committee's 
     attention. We believe that the Banking Committee would be 
     derelict in its duty if it does not address important issues, 
     such as:
       Is the RTC continuing its investigations into Madison and 
     what is the status of any such investigation? How is it that 
     the RTC was able to prepare criminal referrals as early as 
     October 1992, but is unable to follow-up with a civil 
     proceeding? Will the RTC complete any current investigations 
     prior to the expiration of the statute of limitations one 
     month from now?
       Did the RTC act as quickly and effectively as possible to 
     ensure that the Madison bail-out cost the taxpayers as little 
     as possible?
       Did the principal shareholders or officers of Madison 
     direct Madison resources into other business ventures in 
     which they were involved?
       What caused the break-down of the FDIC's procedures for 
     detecting and addressing conflicts-of-interest when the Rose 
     Law Firm was retained to sue Frost and Co.?
       Why did the FDIC agree to settle its $60 million case 
     against Frost and Co. for $1 million, an amount that is 
     allegedly less than the limit of the firm's malpractice 
     insurance coverage?
       This Committee has a solid and proud record of addressing 
     concerns relating to the safety and soundness of insured 
     depository institutions. We believe the Committee has the 
     duty to review thoroughly these and other relevant issues and 
     to obtain information that will be useful as the Committee 
     continues to consider new legislative initiatives and to 
     improve the existing legislative framework to ensure the 
     protection of depositors and taxpayers.
       In the light of this, pursuant to Rule 26.3 of the Standing 
     Rules of the Senate, we request that you convene a special 
     meeting of the Senate Committee on Banking, Housing and Urban 
     Affairs to enable the full Committee to consider appropriate 
     Committee action in connection with Madison. We believe the 
     Committee must exercise its jurisdiction and examine the 
     circumstances and events surrounding Madison's operations and 
     failure.
           Sincerely,
     Phil Gramm,
     Connie Mack,
     Robert Bennett,
     William Roth,
     Alfonse D'Amato,
     Christopher Bond,
     Lauch Faircloth,
     Pete Domenici.

  Mr. D'AMATO. Mr. President, before I tell you why the eight 
Republicans on the Banking Committee took this extraordinary action, I 
would like to discuss another issue pertaining to Madison Guaranty.
  We have on two previous occasions, January 11 and January 25, 
requested that the RTC--that is the body responsible for any civil 
investigation--tell us when the statute of limitations expires on civil 
actions against Madison, and we have received nothing but shocking 
delays and still no official response to our request for this basic 
information.
  The first letter was dated January 11; the last one January 25. My 
staff has been in constant contact and, indeed, we were promised a 
response yesterday.
  As of this afternoon, we still have no response from the RTC. We 
still have not learned when the statute of limitations runs out on 
Madison and Whitewater. What we have here is shocking inaction. Now we 
learn--and we were told this only by telephone, and it was supposedly 
going to be confirmed by a letter to us the day before yesterday--and 
then it was promised to us yesterday, and then it was promised to us 
today--that the civil statute of limitations could possibly expire as 
soon as February 28. It appears quite possible that little, if 
anything, is being done to protect the taxpayers and to punish the 
wrongdoers, or bring about a recovery of taxpayers money.
  During this critical period, valuable time has been lost, and this 
must stop. Mr. President, the clock is ticking. The statute of 
limitations is running out. And I have to suggest to you that this is a 
coverup by the RTC, which deliberately refuses to tell us when the 
statute of limitations is running out.
  Now, they have had this matter for a number of years. There has been 
intense interest and scrutiny, and if their attorneys are doing 
anything, I cannot believe that they could not tell us within the last 
2 weeks when the statute of limitations on civil liability runs out. 
And when they ignore the statute of limitations, justice is denied. 
Indeed, if it is February 28, we have a right to know. If it is March, 
we have a right to know. If it is August, we have a right to know. We 
also have a right to know what, if anything, is being done.
  That brings me to the other reason for his statement. The Republican 
members of the Banking Committee wrote a letter to Chairman Riegle. 
Once before, I requested that the Banking Committee conduct hearings. 
Now, since I made that request, I must point out special counsel has 
been appointed, but special counsel is going to look only into criminal 
matters. Possible civil actions that would toll the statute is not a 
matter that the special counsel is reviewing. If the RTC continues to 
conduct itself as it has, what we are going to face is a situation 
where the statute of limitation has run out, there has been no attempt 
to toll the statute by way of a voluntary agreement. The people are 
going to be denied the truth and taxpayers are going to be denied the 
ability to recover any moneys to which they might be entitled. It was 
that which prompted all of the Members on the Republican side to join 
in this letter to Chairman Riegle.
  Let me read it to you:

       Dear Mr. Chairman: Notwithstanding the recent appointment 
     of a special counsel to investigate potential criminal 
     wrongdoing in connection with Madison Guaranty, a failed 
     savings and loan, the constitutional responsibility of 
     Congress to consider the serious questions of public and 
     regulatory policy raised by this controversy remains.
       Last December Senator D'Amato requested committee action 
     with respect to this issue. In the intervening time, numerous 
     questions that fall within our committee's legislative and 
     oversight jurisdiction have gone unanswered. A review of the 
     limited information that is publicly available indicates a 
     variety of germane issues that command the committee's 
     attention. We believe that the Banking Committee would be 
     derelict in its duty if it does not address important issues 
     such as:
       Is the RTC continuing its investigation into Madison and 
     what is the status of any such investigation?

  Mr. President, if I may interject a comment here. That is a very 
simple, forthright request. We do not get any answers from the RTC. 
Certainly the Congress of the United States has an obligation to 
ascertain this kind of information. The letter goes on:

       How is it that the RTC was able to prepare criminal 
     referrals as early as October 1992 but is unable to follow-up 
     with a civil proceeding?

  Mr. President, again, I would mention, that is a rather shocking 
situation. Criminally, they have moved ahead, but as it relates to the 
civil action, they cannot even tell us when the statute of limitations 
runs out. They tell my staff on the telephone that it may be February 
28. They tell us that they are going to answer in writing but we have 
no answer. The letter goes on further:

       Will the RTC complete any current investigations prior to 
     the expiration of these statutes of limitations one month 
     from now?
       Did the RTC act as quickly and effectively as possible to 
     ensure that the Madison bail-out cost the taxpayers as little 
     as possible?

  Mr. President, if I may interject again--certainly that is well 
within the purview of the Congress of the United States and the Banking 
Committee to ascertain. Should we wait until the statute of limitations 
runs out and then have a moot and academic question? Is that what this 
is about? Does that not seem like an RTC coverup? I suggest it is. Let 
me continue with the letter:

       Did the principal shareholders or officers of Madison 
     direct Madison resources into any other business ventures in 
     which they were involved?
       What caused the breakdown of the FDIC's procedures for 
     detecting and addressing conflicts of interest when the Rose 
     law firm was retained to sue Frost and Co?
       Why did the FDIC agree to settle its $60 million case 
     against Frost and Co. for $1 million, an amount that is 
     allegedly less than the limit of the firm's malpractice 
     insurance coverage?

  Mr. President, again I believe that cries out for an answer, and an 
answer now, not after the statute of limitations runs.
  Mr. President, I would point out that the clock is ticking. And there 
are those who, it appears to me, would like that clock to tick right on 
past and the American people be lulled to sleep and the Congress to be 
lulled to sleep. Mr. President, the letter continues:

       This Committee has a solid and proud record of addressing 
     concerns relating to the safety and soundness of insured 
     depository institutions. We believe the Committee has the 
     duty to review thoroughly these and other relevant issues 
     and to obtain information that will be useful as the 
     Committee continues to consider new legislative 
     initiatives and to improve the existing legislative 
     framework to ensure the protection of depositors and 
     taxpayers.
       In light of this, pursuant to rule 26.3 of the Standing 
     Rules of the Senate, we request that you convene a special 
     meeting of the Senate Committee on Banking, Housing, and 
     Urban Affairs to enable the full Committee to consider 
     appropriate Committee action in connection with Madison. We 
     believe the Committee must exercise its jurisdiction and 
     examine the circumstances and events surrounding Madison's 
     operations and failure.

  The letter is signed by myself as ranking member, Senator Gramm, 
Senator Bond, Senator Mack, Senator Faircloth, Senator Bennett, Senator 
Roth, and Senator Domenici.
  Mr. President, let me conclude by saying that this matter is not 
going to go away. Let me say that the clock is ticking. Here we are, 
the end of January, and we are talking about possibly 28 days remaining 
to find out the answers to these perplexing problems. We understand why 
it is and how it is that some may be afraid to take up this question, 
but I have to tell you that we have a responsibility of seeking the 
truth. This Senator, nor any of my colleagues who joined in this 
letter, make no charges of wrongdoing, but I do suggest that the RTC 
has an obligation to be responsive not only to the Congress but to the 
people of the United States. We are talking about a situation where an 
institution has been bilked of millions and millions of dollars, and I 
say bilked because we find people who borrowed huge sums of money but 
who paid back little or none of it.
  We have a situation where the statute of limitations is running out, 
and as of February 28, if the RTC is correct in their telephone 
conversations with me. The statute may bring to an end any ability to 
pursue claims that the American taxpayers may justifiably have. The the 
RTC hides this in the shroud that the statute has run. That is not good 
enough. I hope that this body will not be a party to the RTC's silence 
by our acquiescence to what seems at the present time to be an RTC 
coverup. The American people are entitled to the truth.
  Mr. President, I yield the floor.
  Mr. NICKLES. Mr. President, I wish to compliment my friend and 
colleague from New York for his statement in this matter. I happen to 
concur with his statement on this issue.
  I would also like to compliment Senator Dole for basically expressing 
some of the concerns that are needed to be expressed by this body.

                          ____________________