AFFIDAVIT I, JAKE GARN, being duly sworn do depose and state as follows: 1. I am presently a member of the United States Senate from the State of Utah. I have served in the Senate for the past 16 years. 2. I first became aware of Charles H. Keating, Jr. in late 1980. My calendars reflect a meeting scheduled with Mr. Keating on December 3, 1980. This meeting was cancelled and rescheduled for December 10, 1980. (My calendars are attached hereto as Exhibit 1.) The meetings may have been scheduled at the request of Senator Dennis DeConcini. Although I have no specific recollection of this, Senator DeConcini may have attended the meeting on December 10, 1980. It is my practice not to refuse a request from a colleague to meet with a constituent. I had never met with Mr. Keating before this time, and knew only that he was from Arizona and was a constituent of Senator DeConcini's. My meeting with Mr. Keating generally focused on the issue of home-building and problems with interest rates. 3. At the December 10, 1980 meeting, Mr. Keating told me that it was his intention to build homes in Utah. I was somewhat concerned by this comment. It raised a red flag in my mind. I do not generally give appointments for people who bring up that they are campaign contributors, and Mr. Keating's statement had a similar tone. 4. I met again with Mr. Keating on May 14, 1981. (My calendar reflecting this meeting is attached hereto as Exhibit 2.) It is my recollection that Mr. Keating requested this meeting. According to my records, Danny Wall, a member of my staff at the time, may have attended the meeting. I recall Mr. Keating again discussing home-building problems and high interest rates. There was no discussion of the savings and loan ("S & L") industry. Mr. Keating was not in the S&L business at this time. 5. At the conclusion of the May 14, 1981 meeting, I instructed my secretary that Mr. Keating should never be given an appointment with me again. I gave this same instruction to Mr. Wall. Although Mr. Keating made no illegal or unethical offers or demands, and in no way threatened me, I was offended by his arrogance and "pushy attitude". 6. Although I received approximately $4000 in campaign contributions during 1980-1986 from Mr. Keating and individuals affiliated with him, I was not aware of this fact until December 1989. I learned about the contributions from Glenn Simpson, a reporter from Roll Call who had researched Federal 1 SPECIAL COUNSEL Keating's privacy and to preserve the integrity of the clearance process. Fred F. Fielding District of Columbia: ss: Sworn to and subscribed before me this 13th day of November, 1990 Roberta L. Barkee Notary Public My Commission Expires 1-31-93 AFFIDAVIT I, JAKE GARN, being duly sworn do depose and state as follows: 1. I am presently a member of the United States Senate from the State of Utah. I have served in the Senate for the past 16 years. 2. I first became aware of Charles H. Keating, Jr. in late 1980. My calendars reflect a meeting scheduled with Mr. Keating on December 3, 1980. This meeting was cancelled and rescheduled for December 10, 1980. (My calendars are attached hereto as Exhibit 1.) The meetings may have been scheduled at the request of Senator Dennis DeConcini. Although I have no specific recollection of this, Senator DeConcini may have attended the meeting on December 10, 1980. It is my practice not to refuse a request from a colleague to meet with a constituent. I had never met with Mr. Keating before this time, and knew only that he was from Arizona and was a constituent of Senator DeConcini's. My meeting with Mr. Keating generally focused on the issue of home-building and problems with interest rates. 3. At the December 10, 1980 meeting, Mr. Keating told me that it was his intention to build homes in Utah. I was somewhat concerned by this comment. It raised a red flag in my mind. I do not generally give appointments for people who bring up that they are campaign contributors, and Mr. Keating's statement had a similar tone. 4. I met again with Mr. Keating on May 14, 1981. (My calendar reflecting this meeting is attached hereto as Exhibit 2.) It is my recollection that Mr. Keating requested this meeting. According to my records, Danny Wall, a member of my staff at the time, may have attended the meeting. I recall Mr. Keating again discussing home-building problems and high interest rates. There was no discussion of the savings and loan ("S & L") industry. Mr. Keating was not in the S&L business at this time. 5. At the conclusion of the May 14, 1981 meeting, I instructed my secretary that Mr. Keating should never be given an appointment with me again. I gave this same instruction to Mr. Wall. Although Mr. Keating made no illegal or unethical offers or demands, and in no way threatened me, I was offended by his arrogance and "pushy attitude”. 6. Although I received approximately $4000 in campaign contributions during 1980-1986 from Mr. Keating and individuals affiliated with him, I was not aware of this fact until December 1989. I learned about the contributions from Glenn Simpson, a reporter from Roll Call who had researched Federal 1 SPECIAL COUNSEL taking some very risky business opportunities that help endanger that fund. Is risk-related insurance the way to go? How do you resolve that difference? Both of you are here advocating leave us alone. When you've got that Federal insurance, how are we going to protect that fund and leave you alone at the same time? 14. On August 12, 1985, I wrote to the President of the U.S. League of Savings Institutions: I believe that the Federal Home Loan Bank Board under Chairman Gray has also been mindful of its responsibility to protect the FSLIC and has carried out its duties courageously. You point out the extraordinary atmosphere in which your industry and the Bank Board have had to operate these past few years, and I could not agree more that this environment has presented major challenges to everyone. I have not agreed with each and every action of the board; I doubt that any member of Congress could say that he endorses any Federal agency 100 per cent. But I have been as aware as any Congressional observer of the operations of the Board, and overall I rate its performance as superior. (Exhibit 4). 15. On December 16, 1986 I wrote to Ed Gray and the other members of the Bank Board. I urged them to extend the direct investment regulation: The letter stated: I strongly recommend that the Bank Board extend the direct investment regulation for at least one year, making only those modifications, if any, that it believes are currently justifiable. (Exhibit 5). 16. During the Bank Board's meeting in December 1986, my letter was cited by Ed Gray in support of extending the direct investment regulation. (Exhibit 6 at 2). 17. In 1986, I introduced comprehensive legislation to recapitalize FSLIC with $15 billion of industry funds, to provide for an overall modernization of our financial services laws, and to give the Bank Board new enforcement and supervisory powers, including the power to institute risk-based insurance assessments. One provision in particular was designed to clear up any ambiguity with respect to the legal authority of the Bank Board to promulgate its direct investment regulation. Section 507 of the bill I introduced stated 5 "Issue such rules, regulations, and orders as it deems necessary or appropriate to define any terms used in any section of this Act and administer and carry out its purposes, including without limitation regulation of risk-taking and prevention of unsafe or unsound practices by insured institutions; and to require compliance therewith and prevent evasions thereof." 18. Unfortunately, it soon became clear that the Congress would not pass a comprehensive bill. In an effort to save the FSLIC recapitalization provisions, I announced on August 7, 1986 that I would proceed with a limited bill containing only recapitalization and provisions dealing with the regulators' authority to arrange emergency interstate requisitions. 19. On October 18, 1986 I explained the urgent need for Congress to recapitalize FSLIC in a statement in the Congressional Record: Mr. President, FSLIC recapitalization is urgently needed. FSLIC_must now keep insolvent thrifts open because it does not have the funds to close them. This risks far larger losses to the fund in the future and unfairly permits insolvent institutions to compete for deposits with healthy thrifts and banks. GAO estimated that the minimum cost of delaying case resolution will be $1.4 billion over the next 2 years--if interest rates remain the same. If they rise, the costs will be far, far greater. Furthermore, these estimates do not take into account credit risk, deteriorating asset quality, or deposit losses of competing institutions, all of which could make the overall losses even worse. There is no questions in anyone's mind--including all the financial regulators--that FSLIC recap is necessary. The real question is whether it's necessary this month, next month, or in 6 months, and the answer is that we should not tempt the hand of fate by doing nothing now. The consequences of that kind of inaction are bleak: potentially devastating losses to the FSLIC fund, the possibility of a merger of the FSLIC fund, and even the possibility of direct Federal appropriations. 20. Although the recapitalization plan passed the Senate, despite my best efforts it was not enacted into law in 1986. 21. In 1987 the Administration again requested a $15 billion recapitalization for FSLIC. However the House of Representatives only passed a $5 billion plan, and the Senate Banking Committee under a new chairman, proposed a $7.5 billion plan. At the beginning of the Banking Committee's consideration of this legislation on March 10, 1987, I expressed my frustration at the process as follows: It just seems to me that it is time to forget all the special interest |