I want to assure the members who weren't here at the outset that you have been recorded at the time you arrived by the staff, so that your name is recorded as being present, and that's given to the reporter so that the proceedings will show you present. I'm going to ask the witnesses to please rise.
The CHAIRMAN. Unless there is some reason why a witness per- haps having some time problems, it is the Chair's intention to call you in the order we have listed you. So we would recognize Mr. William Crawford, the commissioner for the California State De- partment Savings and Loans, first.
STATEMENT OF WILLIAM CRAWFORD, COMMISSIONER, CALIFORNIA STATE DEPARTMENT SAVINGS AND LOANS Mr. CRAWFORD. Mr. Chairman, Members of the committee, my name is William J. Crawford. I have been the Savings and Loan Commissioner for the State of California since February 11, 1985. I entered this business many years ago in 1948 as a regulator, as an examiner; went into the industry in 1954; and, in 1984, late 1984, the Governor asked me how I would like to be Savings and Loan Commissioner.
So I said fine. I became a regulator again. I hope by next April that I will end my career, but I started as a regulator, end as a regulator, but most of my experience is as a regulatee. I gave a 10- page prepared statement. Attached to the back of that statement are some schedules. As a former regulatee, I am used to going to a board of directors and being held accountable on a monthly basis, and on Thursday you deliver the financial statements. The third Tuesday was the board meetings.
The Thursday before you had to have the financials and every- thing and the agenda that was going to come up at the board meet- ing. So I would like to just, in my short prepared statement here, I would just like to go through the exhibits I've put on the back. Ba- sically, you look at an organization to see if they have a consistent history of success. To figure out if they have a consistent history of success, you have to look at their peers.
I was always comparing myself to the peers. Here are eight of eleven top savings and loans in the United States are in California. The No. 8 is Downey Savings and Loan, that just happens to be nearly a perfect match for Lincoln with $3.8 billion in assets. In fact, they are a little smaller. They ranked 67th in the country compared to Lincoln at 65th.
Now, I know this is an unusual period because we got a new bookkeeper in Lincoln when we got a conservator, but for the first 6 months of this year, Downey Savings earned $27 million, and with the new bookkeeper, Lincoln lost $817 million. The California industry lost $719 million, but if we didn't have Lincoln, the Cali- fornia industry would have had a positive earnings of $98 million. California is a large Savings & Loan State where there are many successful peers. They have $402 billion in assets; 29 percent of the assets. The California State chartered industry was a very prestigi- ous industry during the 1960's and historically. In the 1980's when they permitted conversion to Federal stock companies, we lost our
three premier institutions. No. 1, 2 and 3 on this list used to be State charters. But we had some that were not so premier, and American Savings and Lincoln Savings also were State charters but were lost through conservatorship.
Downey is the only State charter left. In examining Lincoln and American Continental, I decided that I could not understand the company without looking at American Continental. So I sent an ex- aminer to the library to look up the record clear back to 1973, and Mr. Keating has said that he ran a successful profitable thrift, a sound institution. From 1973 to 1982, American Continental in- creased its liabilities by $81 million and decreased its net worth by $5 million.
They took it over February 11, 1984. I omitted 1983 because 1983 was a window-dressing year with financing from Drexel Burnham. Though the company only averaged $800,000 a year in earnings for the previous 10 years, they made $19 million for that 1 year, but they also blew up their liabilities, assets and net worth by borrow- ing.
might mention that Mr. Keating states that he bought a trou- bled thrift and turned it around. Actually, this was a case as shown in section C where the little fish swallowed the big fish. American Continental had $23 million in net worth. He made a decision sometime during 1983 to buy this company. So I took the December 31, 1982 figures and American Continental had $230 million in assets while Lincoln had $829 million.121Lincoln had $29 million in net worth. American Continental had $23 million. Now, he said he bought a troubled thrift and turned it around. He paid $51 million for it. That is 1.8 times Lincoln's book at that time. He paid 2.2 times American Continental's book for Lincoln. He said that he bought the stock of a troubled thrift. Lincoln was trading on the market and he bought some of the shares at $8 a share.
But for more than 80 percent, about 82 percent of the shares, he paid $20.83. If you divide that by the $8, he paid 2.6 times market. You don't pay 2.6 times market for a troubled institution. You see one that's troubled, it's got $17 a share and the first thing you know it's a dollar a share or 25 cents a share.
So then we look what happened in the 44 years while they were still keeping the books, and between February 11, 1984 or the end of 1983 and September 1988, which was the last time they reported to their shareholders, they increased their liabilities by $6 billion and decreased the net worth by $125 million.
Now, all this is with ACC keeping the books and the books were cooked, so this is a best case scenario. Now we get a new conserva- tor and bookkeeper and in the 9 months from September 1988 to June 1989, the tangible net worth went down a minus $948 million. Actually, they decreased it from a positive $140 million. So it went down over a billion dollars.
Next page, I show how they compare with 35 and 11 retail type operations. The 11 retail type are in the 35 and the left hand column is Lincoln. Lincoln had less than 4 percent of its assets in consumer type lending. Consumer loans, one to four family units, and multifamily loans; whereas the best operations, the retail oper- ations had 74 percent and the entire district of institutions selected that were publicly traded had 59 percent of this type of thing.
Now, let's go to Lincoln land loans; land and ADC loans. Lincoln had 27.5 percent of its assets in this. The district average for the 35 was 1.6 percent and the retail operations only had 2 percent. So that gives you a little profile of their asset mix. Then we go down to how they ranked in the whole United States. This was the 11th district. This was the whole United States.
They were 65th in size. They were first in land and ADC loans; third in legal expense; 11th in professional fees; and 14th in broker deposits. The Arizona newspaper carried an article of the highest paid executives in Arizona. The 17 highest paid executives. Eight of those 17 highest paid executives worked for American Continental Corp. I believe in the last 3 years this company, the parent itself, leaving Lincoln out, lost about $25 million each year.
You'll notice the salaries. $7.9 million they paid in 1988 to these eight executives. And you'll notice the second highest paid execu- tive only worked-he made $1 million, but he only worked for I think 8 months. If you analyzed his salary, it would be $1.428 mil- lion, and that's $119,000 a month.
When we handled the first initial buyer that came through, the Ernest Leff Group and Spencer Scott, we were told that Charlie threw them a curve ball. He was going to push down Jack Atchison from American Continental into Lincoln because he had a 2 year severance pay in his contract. That's just hearsay, but that's what they represented.
American Continental, if you look at the structure, this had 54 corporations. The bottom part of this shows that--
The CHAIRMAN. Mr. Crawford, will you yield to me at that point? Mr. CRAWFORD. Yes.
The CHAIRMAN. This list of individual's salaries that total $7.9 million, do you know whether these are Keating family members? Mr. CRAWFORD. I think Mr. Wurzebacher is. Of course, Mr. Keat- ing. Charles Keating, III. Robert Hubbard. Four of them are. Half of them. That's a good mix.
The CHAIRMAN. Well, he is a family man, you know.
Mr. CRAWFORD. That's right. In the first group here, you'll notice that they only have first and second tier subsidiaries in American Continental. But you go down to Lincoln Savings, you get the fifth tier subsidiaries. That gives you a lot of places to hide the smoking
If you look at the number of corporations they had when they acquired the company, they had 17. But in 1984, right after the ac- quisition, they added another 17 and then they added more than that, to where they had more than triple the number of corpora- tions they had before.
This is very difficult to get in and out in 4 months. They want you to get in and get out in 4 months. If you had a simple institu- tion, that's fine. I wanted to say a little something about-you don't have this exhibit, but counting the person that was in place at the time they took over the institution, they said they were going to keep it as a traditional thrift and they were going to aug- ment the staff.
Well, they certainly augmented the staff. They had seven chair- men, counting that person, and counting John Rousselot, who became chairman on April 11, 1989. They had six presidents, in-
cluding Roger Clark from the FDIC, which is running the institu- tion now. So that's quite a turnover. They didn't have any turnover at the ACC top. I think sometimes the presidents and chairmen of the board of Lincoln were just errand boys to go back and forth. I have one other thing. They talked about examinations and what we do about it. We examined this institution with four regu- lar exams and two special exams. So that's six since the institution was acquired. When I came to work in February 1985, we only had 98 employees on staff. Right now, we have 64 examiners, about 16 appraisers, about four attorneys, and the rest are administrative or clerical.
ACC needed 48 CPAs and 15 attorneys on staff, yet I showed you where they ranked with Savings & Loans in the United States on legal and professional fees. So this was a complicated organization, complicated on purpose to conceal the true nature of the transac- tions.
[The prepared statement of William Crawford can be found in the appendix.]
The CHAIRMAN. Thank you very much, Mr. Crawford. The next witness is Mr. Davis.
STATEMENT OF WILLIAM DAVIS, CHIEF DEPUTY COMMISSION- ER, CALIFORNIA DEPARTMENT OF SAVINGS AND LOAN
Mr. DAVIS. Mr. Chairman, my name is William Davis. I'm the chief deputy commissioner for the California Department of Sav- ings and Loan. I was appointed to that position in April, 1985 and have worked with Commissioner Crawford since then. Prior to that I was in the savings and loan industry in California since 1962, about 23 years in the industry as a regulatee.
I really do not have any opening statement today except to say that we're here to look into the Lincoln insiders and how they pro- vided the fanciest financial fiction that money could buy. As Mr. Crawford said, it took 48 CPAs and 15 attorneys on their staff to keep this fiction believable. It also took the assistance from many outside, expensive validators and no one will ever know the true cost of the Lincoln case.
Mr. Keating and others charge that the regulators were endeav- oring to write down Lincoln's valuable assets and were ruining his healthy, profitable financial institutions while the regulators did not originate any of these assets nor any of the other high risk strategies that produced a $948 million negative tangible net worth for Lincoln June 30, 1989 and we're just pleased to be here and pleased to answer your questions. Thank you.
The CHAIRMAN. Thank you very much, Mr. Davis. I wanted to say that we're very grateful for the voluminous testimony that you presented in your formal presentation. That will be in the record intact and therefore we are very grateful for the excellent manner in which you have summarized and encapsulated your testimony. Our next witness is Mr. Patriarca.
STATEMENT OF MIKE PATRIARCA
Mr. PATRIARCA. Good morning, Mr. Chairman. My name is Mike Patriarca and at the outset, Mr. Chairman, I would like to express
the gratitude of us from San Francisco to you and to the committee for postponing our scheduled appearance in light of the earthquake. It was very considerate.
The CHAIRMAN. Thank you very much.
Mr. PATRIARCA. For the last 3 years, I've been in charge of the examination and supervision of the thrifts in California, Arizona, and Nevada. Prior to undertaking this happy task, I was an en- forcement attorney and supervisory official at the Comptroller of the Currency. In my prepared statement, Mr. Chairman, I've at- tempted to outline several of the pieces to the Lincoln puzzle.
This morning, I'd like briefly to highlight the novel aspects of the case and since our performance in San Francisco as the super- visors we were in charge has been questioned, I'd like to give you my candid assessment of how we did.
The story of Lincoln unfortunately is sadly familiar. Fraud, in- sider abuse, risk taking beyond all bounds with insured deposits that went unchecked by a board of directors and outside auditors until the losses were truly extraordinary. Unfortunately, even the regulators have some blame to share in the Lincoln debacle.
The plot, sadly enough, has been rerun in recent years with abso- lutely numbing frequency but in other ways, the Lincoln story does have its unique aspects. Chief among these perhaps is the incredi- ble arsenal of hired guns that Lincoln hired to lend it respectabil- ity. Individuals, firms, and officials who should have known better fell all over themselves to sell their reputation in furtherance of the Lincoln cause. In both numbers and prestige the Lincoln arse- nal was truly a formidable force. It covered many arenas. Frankly, I've often thought of our battles with Lincoln as a kind of surrealistic David and Goliath story with the regulators, with all the statutory authorities you've given us, cast as the David.
I've absolutely no respect for the tactics that were employed by Lincoln but I have to tell you I had to expect-I had to respect their willingness to go to war with the Government and I had to respect the weapons that they brandished in all three of the Gov- ernment's branches.
When it came to wielding influence the Keating crowd really outshone those Texas ne'er-do-wells that my brother, Mr. Selby, had to supervise. Unfortunately, the Texas crowd was no match for Lincoln.
The bitter irony of all this, however, is that all those resources that were brought to bear to stymie the regulators and to obstruct the regulatory process were paid for with tax payer dollars.
Another unique, if you will, and particularly tawdry aspect of the Lincoln case is that it wasn't enough just to rob the depositors and taxpayers of their funds, the Keating crowd really extended themselves by going out into Lincoln's branches and selling to retail customers incredibly risky paper from the Lincoln's holding company, paper that is now absolutely worthless. It seems to me by this wanton act ACC and its management really distinguished themselves among the legion of low-life thrift management who have been a scourge on the landscape for the last several years.
Finally, the Lincoln case has its unique aspects on the regulatory front as well. As you know, the Bank Board removed our jurisdic- tion to exam and supervise Lincoln. This was a mistake. Not be-
cause it embarrassed me and my San Francisco colleagues in the national spotlight, but because it called into question the whole or- ganization's willingness as a vigorous regulator. I genuinely believe based on my 14 years, experience as a regulator that what is now the Office of Thrift Supervision is a credible regulatory source and is the equal of the Commercial Bank Regulators. I genuinely be- lieve that.
I urge the committee not to attribute to the whole organization and don't judge the whole organization on the basis of one badly mishandled case. This case was badly mishandled but to project it to the effectiveness of the whole organization would be a terrible injustice to the thousands of regulatory personnel who are doing a particularly good job.
Well, that brings me to a review of how good a job we in San Francisco did when we supervised Lincoln. Certainly it was a unique case and it certainly posed regulatory challenges that I hope not to meet again. I think in dealing with these challenges the San Francisco staff did an exemplary job in almost all respects. We conducted an examination in 1986 despite numerous obsta- cles based in our way by the Keating folks and the tactics that they used to get us to back down. We didn't back down. We persisted in identifying the risks posed by Lincoln and in gathering the evi- dence needed to put the company into receivership.
I believe today, as I believed then, that there was a basis for put- ting this company into receivership and that the actions were available that could have prevented the losses that eventually in- curred.
I take no comfort at all from having ultimately been vindicated on the Lincoln case. I'm also a taxpayer and there is no comfort at all in looking at $2 billion that has beer: squandered and stolen.
I don't feel satisfied a bit. Although I believe the San Francisco efforts in the Lincoln case were tremendous; in hindsight, I also think that there are things that we could have done better and that there were mistakes that we made.
I'd like to address a couple of those now.
First, we approved a tax-sharing agreement between Lincoln and its holding company that permitted the holding company eventual- ly to wrongfully syphon off more than $90 million of money from Lincoln.
Here's how it happened. Lincoln submitted an application to us in early 1986 to have a tax-sharing agreement with the holding company; they said this is a nonevent. Tax-sharing agreements are in fact common. By the tax-sharing agreement Lincoln would pay its tax liabilities to the holding company, ACC, instead of directly to the IRS. ACC, in turn, would file a consolidated tax return and pay everybody's taxes together.
Well, we got the application, we reviewed it, we sent it back to Lincoln saying we will approve this but there are conditions. Chief among those conditions is you have to amend this tax-sharing agreement so that there is no pare-payment of Lincoln's tax liabil- ity to ACC. You can't pay in advance of when the payments are due to the IRS because that will be a loan to the holding company. Loans to holding companies are expressly prohibited by the regula- tion.
We sent it back to them saying that-we got telephone calls from the Lincoln counsel saying its in the hands of our tax accountants, they're amending it, we're going to fix your concern, not to worry.
In fact, they amended the agreement, they sent it back with a cover letter saying its been amended to satisfy all the concerns you expressed, here it is. We approved it. Unfortunately, in reviewing it it had been crafted in such a way that we didn't find-ultimately, they say, allowed them to upstream these taxes.
Now, the Lincoln people say, but, the regulators in San Francisco approved this, we were perfectly entitled to do that. That's absolute nonsense. The regulation specifically states no money can be lent from the institution to the holding company and this so-called ap- proval that they got from us was the product of repeated and bla- tant misrepresentations.
Naturally, if we had to do it again, we wouldn't have approved the application at all, much less with conditions. But we did intend to go onsite and to examine whether they were in fact complying with the tax-sharing agreement. Unfortunately, our examination to do that was postponed. I'll get into that in a moment.
In early 1987, we hired a company called Kenneth Leventhal & Co., and they're acknowledged experts in real estate accounting. We hired them to look into some of the questionable accounting practices that we had identified in our examination with regard to Lincoln and ACC, its holding company.
Kenneth Leventhal identified, on the basis of documents that we had a series of questions that they thought had significant impact on Lincoln, but they said "we have to go onsite to really nail down the case." Among those questions were whether Lincoln was adher- ing to the tax-sharing agreement. The onsite presence that was needed to do that was scheduled for a field visit in September 1987. When we notified Lincoln at the end of August that w were coming in for a 2-week field visit, they responded that it would take a court order to permit us to enter their premises and conduct the examination. We also immediately asked for and received a meeting with high level Bank Board officials, and the high level Bank Board officials, in turn, instructed us not to perform the ex- amination.
We nevertheless sent a written outline of Kenneth Leventhal's concerns and the areas of inquiry to the Bank Board staff in Wash- ington. When the decision was finally made to take away our juris- diction on the Lincoln case, we recommended that a holding com- pany examination be undertaken, that we review all intercompany transactions, including the tax-sharing agreement. The Washington folks began an examination of ACC on September 1, 1988, 1 year after our field visit was scheduled.
This leads me to another area, where our performance in San Francisco has been faulted. We've been criticized for not perform- ing a holding company examination in connection with our 1986 examination at Lincoln. Others, noting that the Washington-led ex- amination in 1988 identified abuses that hadn't come to light in our exam in 1986, suggested that we screwed up by not examining the holding company.
Well, on the basis of my fairly significant experience as an enforcement attorney and as a supervisory official, I thought we had
enough from our 1986 examination to place Lincoln into receiver- ship. My counsel, who had been Deputy Director of FSLIC and head of the Bank Board's litigation division, felt we had enough from our 1986 examination to put it in receivership.
We had a nationally prominent law firm to help us come in and analyze the legal aspects of the case, and they thought we had enough. The head of the Bank Board's Office of Regulatory Activi- ties, who had previously been for a number of years Deputy Comp troller of the Currency in charge of problem banks, thought we had enough in the 1986 examination to put Lincoln into receivership. The Bank Board's Office of Enforcement thought we didn't have enough. Frankly, I was astonished that an office whose sole reason for existing was to aggressively pursue wrongdoers and high risk- takers, and to protect the insurance fund, would advise against the receivership on Lincoln. Frankly, I still find that astonishing.
Nevertheless, the Office of Enforcement was entitled to its opin- ion, and the Bank Board was entitled to rely on its opinion and to reject ours. The short answer to why we didn't do a holding compa- ny examination in 1986 is that the exam that we did of Lincoln was an exercise in pulling teeth. It was an exercise in being frus- trated and meeting with refusals to provide even the modest, most modest of documentation on the part of Lincoln management.
After an extended period of doing just that, we thought we had enough and we thought the time necessary to examine the holding company was unwarranted. Besides that, Lincoln comprised over 90 percent of the assets of the holding company. We had assur- ances from the Office of Enforcement that they were going to depose the holding company officials, and in fact our examination of Lincoln did look at portions of ACC as well.
I will note as a footnote that most of the problem transactions found in the 1988 exam occurred after our 1986 exam.
The issue of delay is another that's been raised by folks review- ing San Francisco's handling of the Lincoln case, specifically, why did it take 6 months after we concluded our onsite work to send in this recommendation for receivership. I take personal and complete responsibility for the decision that led to that delay.
I came to my job in San Francisco on Monday, August 18, 1986, having ended my OCC career the previous Friday afternoon. During the first week that I was on the job, we had a meeting in Washington about the then ongoing problems with the Lincoln ex- amination. During my first month on the job, the Washington Post ran a front-page article in which Lincoln officials and the former Deputy General Counsel of the Treasury Department, on their behalf, alleged that the Bank Board was harassing Lincoln, that the Bank Board had a personal vendetta against Lincoln's manage ment, that the Bank Board was biased and that the chief means of harassment was our examination of Lincoln.
In light of the serious findings that we were coming up with in the examination, and in light of the serious consequences that were likely to follow from that I thought, and in view of the loudly al- leged bias and harassment by these Lincoln folks who were incred- ibly well-financed and litigious, I decided personally that we were going to cut square corners on the completion of the examination product.
I instructed my staff to give the Lincoln management a complete rendition of our examination findings, and to give them every op- portunity to rebut our findings. I intended to eliminate all those claims of bias, vendetta, by basing our conclusions solely on the facts, and solely on facts that Lincoln had the opportunity to review and rebut.
By meticulous adherence to standards of fairness, I aimed to both reach the right substantive conclusion in supervisory course, and to create a record that would demonstrate in a subsequent legal chal- lenge that there was no bias that played any part in our recom- mendation.
Needless to say, Lincoln took full advantage of my decision and used the process to further delay the conclusion of the examina- tion. Examination closing meetings and asset classification meet- ings were rescheduled and reheld. We gave the institution addition- al time to submit arguments and documents that would affect our conclusions on the variety of issues. These submissions were made late, and were frequently incomplete.
In an incredible reversal, Lincoln's management and lawyers that had blocked even the most innocuous request for information during our actual examination, were now coming forward with box- loads of documents, when it seemed that inundating us would still drag out the process. They overloaded us with seemingly irrelevant material. Nevertheless, it did require our review to determine its significance.
You may not agree with the decision I made to cut square cor- ners. It did result in a delay of about 4 months in completing our examination product and recommendation. But it also accom- plished what I intended to do. The facts upon which we based our decision withstood Lincoln's challenge and they withstood and were upheld by a subsequent review by the Office of Regulatory Activi- ties.
Furthermore, we demonstrated a fairness to the decisionmaking process that can be subject to no serious question. I think there is some basis for criticizing us for not revoking ACC's debt authority while we supervised Lincoln. When it acquired Lincoln, the Bank Board granted ACC the authority to incur up to $550 million in debt, subject to an annual review of a debt budget by us.
Our review of holding company debt budgets is routinely an ex- ercise in quantitative financial analysis. What we look for in the debt budget is are the assumptions reasonable and realistic; are the projections reasonable and realistic; and does it appear that the company can service, from a cash flow standpoint, the debt that its projecting to incur.
Under our regulations, the review of the budget does not consid- er the parties lending the money to the holding company or the other qualitative aspects. Nevertheless, separately, we were ques- tioning the accuracy of the disclosures that ACC was making in connection with the sale of its subordinated debt to the public. We detailed these concerns in telephone calls and in a February 3, 1987, memo to the Bank Board's Corporation and Securities Divi- sion. Our disclosure concerns were, in turn, relayed to the SEC, and we provided the SEC with a number of documents in connec- tion with their review of the ACC disclosure.
We had no authority to deal directly with disclosure problems, other than to bring them to the attention of the people who had the authority to deal with them, and we did that. If I could do it again, however, I would take an expansive view of our authority to review the debt budget and attempt to deal with the disclosure problems by eliminating their authority to incur debt.
Our failure on this issue was not in neglecting to perform our customary review and analysis of the debt budget. We did that. What we failed to do is to identify a way of solving this problem that was outside the normal course. Quite frankly, we expect that of ourselves, and I take the criticism that we did not do it.
On the whole, Mr. Chairman, I am satisfied with the quality of San Francisco's supervision of Lincoln Savings. There are things that I would do differently if I had to do them again, but these are relative few in the context of scores of very difficult and thorny issues involving the Lincoln case.
When I came on the scene in San Francisco, the vigorous super- vision of Lincoln was well underway. Throughout the years that I have observed the San Francisco staff, they perform remarkably well, and I think in the course of your review of the Lincoln case, you will note that, facing miserable conditions, between the battles that were going on with Lincoln and the battles that were going on with Washington, they performed extraordinarily well.
Throughout, San Francisco's staff have remained true to their principles. They have not wilted in the face of threats and pres- sure, and they have never looked the other way. They take posi- tions because they are right, not because they are easy, and frank- ly, I am proud to be associated with them.y
[The prepared statement of Mike Patriarca can be found in the appendix.]
The CHAIRMAN. Thank you very much, Mr. Patriarca, and I am in complete agreement and admiration, and I want to thank you for your and your colleagues' great work, honestly performed, effi- ciently carried out, in the light of what we know to be very, very heavy pressures that, unfortunately, all too often, we are led to be- lieve, happens more than it should in our Government, and in ret- rospect, every one of us can always say, well, we could have done it this way, we could have done it that way, but basically, you con- clude that your regulatory conclusions were something that you still affirm and reaffirm.
Mr. PATRIARCA. Absolutely.
The CHAIRMAN. Our next witness is Mr. Black.
STATEMENT OF WILLIAM BLACK, ACTING DISTRICT COUNSEL, SAN FRANCISCO REGION, OFFICE OF THRIFT SUPERVISION Mr. BLACK. Thank you very much, Mr. Chairman. Mr. Patriarca has given our thanks that you were able to postpone the hearing to allow us to come. I would like to give our thanks that you are con- ducting the hearing. It took some courage, we know, on your folks' part, as well, and I understand the committee has stood together on it.
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