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TO: FILE

FROM: JOHN TIMMONS

RE: ACTIVITIES IN THE S&L AREA

DATE: APRIL 20, 1989

From July 1983 until January 4, 1987 I was employed as a legislative assistant for Congressman John McCain. Financial institutions were among the issues to which I was assigned.

In June of 1984, Congressman McCain directed me to review an activity then on-going at the Federal Home Loan Bank Board (FHL8B). It is my firm recollection that he gave me this direction after his help was requested by individual savings and loans in the state of Arizona as well as the Arizona Savings & Loan Association which was the trade association for all S&Ls in the state. My contact person was either Gordon Murphy or Norman Miller (Gordon Murphy later went on to work for the Arizona Bankers Association and was replaced by Norman Miller if he had not done so already).

On June 24, 1984, I drafted a letter for the Congressman' signature to then Chairman of the FHLBB, Ed Grey. The letter questioned whether his proposed regulation to limit S&Ls direct investments was really an appropriate remedy for an ailing industry which had gotten in that shape largely through being tied down with inflexible assets.

On August 8, 1984, I drafted a follow-up letter on the proposed direct investment regulation for the Congressman's signature. Enclosed in the letter was a copy of an 1982 study by the FHLBB's staff which suggested that liberalization of investment powers had proven successful in Texas. The letter also expressed the Congressman's interest in seeing any evidence the Board might have to contradict this study. addition, the letter requested that a full evidentiary hearing on the regulation be held by the Board.

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On January 4, 1985, I drafted a letter to then Chairman esting an extension of the comment period on the stment regulation. This letter was enclosed in to White House Chief of Staff Jim Baker and cretary Don Reagan asking for their assistance in comment period on the direct investment regulation. These letters vere dated January 30, 1985.

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On July 21, 1986, I drafted a letter for the Congressman's signature to then Chairman Grey. The letter expressed concern over the Board's activities in the direction of restricting the povers of state-chartered S&Ls, including the direct investment

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regulation. This was a new trend for the FHLBB as, in my experience, they had limited themselves previous to this time to the regulation of federally chartered S&La. The letter also requested the Board hold an evidentiary hearing on these activities. It is my recollection that the entire Arizona delegation joined Congressman McCain on this letter

It is my further recollection that some, if not all, of the delegation joined the Congressman on the previous letters. Additionally, I worked in close collaboration with Senator Dennis DeConcini's office on the direct investment regulation issue and am quite sure that he sent seperate letters of a similar nature if he did not join ours (or we his, I am not sure which letterhead was used).

To the best of my knowledge, these are the only activities undertaken by Congressman John McCain's office during this period regarding the S&L industry.

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I regret you were embarrassed to speak with Ed Gray regarding Lincoln.
Had you been successful in exposing Gray's destructive policies at that
time, the U.S. taxpayer would now be at least $250 billion better off.

Come home for a week and study the take over by the "Feds" of over $20
billion of Arizona S&L's and their assets causing real estate here to
go into a free fall....causing personal anguish to so many people. Do
you really believe I caused all that? The confiscation by the
government is taking place all over the United States, not just here.

I consistently and correctly predicted what would happen in detail from
the very beginning of Gray's reign of terror and incompetence. I tried
to resist the holocaust.

Now because of that resistance they have unleashed the awesome powers of
government against us. For what? For trying to alert Congress to an
impending tragedy which has occurred precisely as I predicted?

And you're embarrassed?

Respectfully,

Chalie

Charles H Keating, Jr.
Chairman of the Board

CHK/sbg

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