THE HISTORY OF ED GRAY

THE $26,000 REIMBURSEMENT

In response to an investigation by the Office of Government Ethics, Ed Gray repaid nearly $26,000 to a fund maintained by the 12 regional Federal Home Loan Banks. --$13,868 was for a private plane that was chartered from Indianapolis to Monterey, California for Mr. Gray to visit his ill father in 1984.

--$11.899 reimbursement was made to cover Mr. Gray's wife's travel expense while accompanying him on business trips, including trips to Hawaii, Puerto Rico and Palm Beach.

(New York Times. December 6, 1986)

THE 380,000 REDECORATION

In his first year as Chairman of the Federal Home Loan Bank Board, Mr. Gray spent nearly $50,000 to redecorate his office--way over budget.

(Los Angeles Times, December 12, 1986)

LIVING HIGH ON THE HOG OFF THE SAVINGS & LOAN INDUSTRY

Following a four month investigation in late 1986, the Office of Government Ethics ordered the Federal Home Loan Bank Board and its Chairman Ed Gray to stop taking travel payments from the Savings and loan industry it regulates. Additionally, the Office of Government Ethics asked the Justice Department to investigate whether the bank board's past practices in this area were illegal.

(Washington Post, December 5, 1986)

Gray sent letters to the House and Senate Banking Committees formally apologizing for his "flawed judgments" in allowing himself and his staff to accept million of dollars in travel and other operating expenses from the savings & loan industry which his agency regulated.

(Washington Post, December 9, 1986)

MORE QUESTIONABLE EXPENSES

The Justice Department investigation (see above) also focused on inappropriate expenditures by Gray and other bank board officials. These expenses exceed and are outside of normal Congressionally mandated spending ceilings. Examples:

--In 1984 Gray's wallet was stolen in Paris when he left it in a phone booth. The $744 worth of cash and airfare discounts in the wallet were fully reimbursed by the Federal Home Loan banks.

--Exploding golf balls and books for outgoing board member Hovde ($53.20)

..Rooms for Gray, other Bank Board members and staffs as well as reception/dinner for 50 people August 25-27, 1966 (812,324.87 including 391.48 for cigars and $40 for hair salon.)

--Flowers sent by Gray (859) (Washington Post, December 8, 1984)

membere the Peder Congresmen

seeunting Office (GAO) determined that Gray and other FHLBB w-by accepting million of dollars in travel and other expenses from amins in an effort to improperly bypass a spending ceiling set by ich may be spent on day-to-day expenses. This legal opinion was issued at the request of the Rep. Ed Boland (D-Mass).

Page Two

THE MAN WHO LOVED TO TRAVEL

During the first two months of 1986. Mr. Gray spent a total of six days in his Washington office.

(Los Angeles Times, December 12, 1986)

In the two month period of August and September 1988 Mr. Gray took thirteen business trips including trips to Dublin, Ireland, Hawaii and resorts in Florida and California. His estimated mileage for those trips 45,130 miles.

(Washington Post, December 8, 1986)

SOMETIMES ITS HARD TO SAY GOODBYE

Ed Gray's term as Chairman of the Federal Home Loan Bank Board expired July 1, 1987, but six weeks later in August of 1987 he was continuing to use a government office, telephone, computer and secretary service to hunt for a job. Gray was using the facilities of a FHLBB subsidiary--ORPOS. The Director of ORPOS who Gray had hired at a six-figure salary (legally avoiding the top federal pay of $75,000) said it was his decision to allow Gray to use the space and secretarial services even though he knew Gray was doing no governmental work.

(Washington Post, August 13, 1987)

Please see attached article from a San Diego newspaper. Is there anything we can do to bring heat or make a statement regarding this matter?

Attachment

SPECIAL COUNSEL

EX. 523

Your letter to Senator McCain dated May 30, 1989, allegedly describes a April 2, 1987 meeting between you Senators McCain, Glenn, Cranston and myself. There is little relationship between the meeting you describe and the one we held. Your recollection of the meeting is so distorted as to bear no resemblance to fact.

I do not plan to get into an item by item refutation of the charges in your letter. However, I clearly recall that our meeting focused primarily on your insistence that you knew nothing of Charlie Keating or Lincoln Savings and that you recommended we meet with your regulators from San Francisco. specifically urged us to meet with the San Francisco regulators and would not discuss any specifics of the case, pleading ignorance.

Your new allegations of "a deal" are simply false. I am surprised and disappointed that a former high Administration official would stoop to this kind of duplicity.

Sincerely,

You

Dennis De Concini

DENNIS DeCONCINI

United States Senator

DOC/I.

SPECIAL COUNSEL
EX. 524

EDWIN J. GRAY

P.O. Box 14000 W
Miami, Florida 33196

June 5, 1989

Semtor Dennis DeConcini

Member, United States Senate
Washington D. C. 20510

Dear Senator DeConcini:

I am in receipt of your letter of June 2, 1989.

Senator, you have understandably chosen to use selective recall
of the meeting in your office. My letter to Senator McCain avoids
the selective memory you have chosen.

The fact that I have publicly disclosed that there was a meeting
at all is embarrassing enough, given that it was held in the privacy
of your office. I can understand why you so vehemently deny today
what actually did occur in the meeting, Senator.

I reported to my staff exactly what occurred in that meeting within
a half hour of its conclusion. I had nothing to gain then from
reporting what was said in the meeting. Nor do I have anything to
gain today, certainly not accusations of stooping to...duplicity"
by you sir. Nor do they have anything to gain.

The truth is, senator DeConcini, the meeting lasted an hour.
did not talk for an hour about what I didn't know about Lincoln
Savings (1 suggested that you therefore talk with the regulators
from San Francisco). Hy. description of the meeting in your office
as recounted in my letter to Senator McCain is fully accurate and
fully truthful. The fact that what was said in that meeting is
now emanantly embarrassing to you Senator does not mean that it did
not occur. You cannot simply shred it because you are a United
States Senator and are somehow above criticism by an ordinary
citizen who was there, and reported to his staff while a government
employee, what occurred in the meeting. Senatorial status does not
immunize you from truthful disclosure.

Not only do I stand by my recounting of the meeting to Senator McCai:
but I also vant to state, Senator DeConcini, that telling the truth,
ugly as it may be, is not duplicity. I invite you, Senator DeConcin:
to call the members of my staff, to whom I reported the details of
the meeting in question, to verify my report to them -- only a half
hour after the meeting in your office concluded.

I am an honorable man, Senator DeConcini. I am an honest man. I
an indeed sorry that you have chosen to react as you have. Your
vehemence and name-calling are an interesting commentary in themselv

3.ra

GY 00113

SPECIAL COUNSEL