Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, May 24, 1990 TAG: 9005240148
SECTION: BUSINESS PAGE: C-6 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Neil Bush, who served three years on the board of directors of Silverado Banking, Savings and Loan Association of Denver, told the House Banking Committee that allegations of conflict of interest from federal regulators "are frivolous."
"The fact they are being pursued is baffling to me," said Bush, 34, an oil and gas developer.
Bush appeared amid tight security with four other former directors as the committee voted to issue subpoenas to former Silverado executives and others who ignored invitations to testify.
Bush told the committee his business relationships with two of Silverado's major borrowers, developers Kenneth Good and Bill Walters, "don't create a conflict in fact or in law." Regulators have alleged that loans by Silverado to the two were a conflict of interest for Bush, who had oil and gas business deals with the men but failed to disclose that relationship to Silverado's board.
Bush said Walters was "a passive, limited partner in JNB" Exploration, Bush's company, but had no involvement in operations of the enterprise. Walters put $150,000 into JNB.
Bush said his own investment was $100 "and sweat. I was out there working every day. I generated the deals."
A federal regulator told the committee Tuesday that Bush, a focal point of the inquiry into the Silverado failure, approved $106 million in loans to Walters, who defaulted on the entire amount.
"There was no conflict of interest," Bush said of the loans. "I didn't have any financial interest or any interest otherwise in any of" Walters' enterprises.
Good and Walters failed to appear before the banking committee and were among those to whom the panel issued subpoenas.
Rep. Jim Leach, R-Iowa, defended Bush. "It's inconceivable that Neil Bush wittingly did anything wrong," Leach said. "He appears to have been used."
Stephen Hershkowitz, deputy director of enforcement for the Office of Thrift Supervision, and other regulators said Tuesday that Silverado made inflated loans to developers who had to reinvest part of the money in the thrift.
The regulators told the committee that under the "quid pro quo" lending program at Silverado, developers received loans to buy buildings at inflated values set by outside appraisers.
In exchange, the developers were required to use the surplus part of the loan money to buy preferred stock in Silverado's holding company or to purchase an interest in a "loan pool" set up by the thrift.
by CNB