ALAN CRANSTON

United States Senate

OFFICE OF

THE DEMOCRATIC WHIP
WASHINGTON B.C. 20010

June 7, 1989

Mr. Edwin Gray

Chase Federal Savings Bank

7300 North Kendall Drive
Miami, FL 33156

Dear Mr. Gray,

I have read your curious response of May 30 to Senator McCain
about the substance of a discussion involving Lincoln Savings
you allege took place with a group of Senators including
myself. Frankly, I'm astonished. I did not participate in
any discussion with you which even remotely resembles what you
describe.

If

What I said to you about Lincoln Savings when you were
chairman of the FHLBB was clear and simple: Do something to
end the inordinate delay in the examination of Lincoln.
Lincoln was violating regulations, take appropriate action
against it. If Charles Keating had broken any laws, bring
charges. But if a case could not be made against Lincoln,
then bring a halt to what appeared to be the harassment to
which Lincoln was being subjected by your regulators. Don't
keep Keating twisting in the limbo of your bureaucrats'
malicious indecision.

In any conversations I had with you about Lincoln, that was my
sole message.

Sincerely,

Houten

Alan Cranston

GY 00114

SPECIAL COUNSEL

EDWIN J. GRAY

P.O. Box 66000 W
Miami, Florida 33166

June 15, 1989

Senator Alan Cranston

Office of the Democratic Whip
Mashington D. C. 20510

Dear Senator Cranston:

I have received your letter to : of June 7, 1989.
7, 1989.
The letter speaks volumes.

Senator Cranston, you may be astonished. I am not.
My recounting of the meeting with you and your three
senatorial colleagues in Senator DeConcini's office
an I believe April 2, 1987, is fully accurate and
fully truthful.

You, Senator Cranston, may not remember what Senator.
DeConcini proposed to me in that meeting. I don't know
However, whether you remember or not, what I described
did, in fact, cocur.

Further, I frankly resent your references to "my
bureaucrats (officers of the Federal Home Loan Bank
of San Francisco)", as being "alicious" or as having
engaged in "harrassment" of Lincoln. If anything, as
history now clearly shows, it was Lincoln Savings which
was engaging in "harrassment" of the regulators. Your
continuing efforts to,.yes, intervene with regulators
in behalf of Lincoln has occured at the expense of
the taxpayers and perhaps even at the expense of thousa
of debtholders. I would hope that in the future the
payers'. interests- rather than political contrib-
would be given the priority.

Sincerely,

38-020-91 - 5

SPECIAL COUNSEL

STATEMENT OF CHAIRMAN KDWIN J. GRAT

September 19, 1986
Page 1

Several weeks before I testified, on October 17, 1985 before the
Financial Institutions Subcommittee of the House Banking
Committee, I received a telephone call from Board Member Mary
Grigsby in my car, which was across the street from the Cannon
House, Office Building.

I had been meeting with various members of the financial·
Institutions Subcommittee on the Hill. Mrs. Grigsby said: she
wanted to talk with me but not on the car phone.

I got out of the car and went inside the Cannon office building and called her from a coin telephone there.

What I remember her telling me on that call was that she had received a phone call from a lawyer in Washington who told her a major Southern California savings institution wanted to hire me to head the association and the institution was prepared to pay me a lot of money. She said she wanted me to know. I said to Mrs. Grigsby ! wasn't looking for a job and that she ought to call (my chief of staff) Mrs. Shannon Pairbanks and relay whatever this was all about to her.

I later learned from Mrs. Fairbanks that the attorney to whom
Mrs. Grigsby had spoken was Raymond Gustini who, I understood,
was in some manner representing Lincoln Savings and Loan
Association in California, the institution in question.

Subsequently I discussed the matter further with my General
Counsel, Hz. Norman Raiden. We both agreed in our conversation
that it appeared to us that Lincola Savings was expressing
interest in employing me because the management of the
institution wanted to buy me out of, that is to say hire me
away from, my job as the chief regulator of this and other
FSLIC-insured savings institutions.

I was frankly very surprised that an institution, which had vigorously and continuously opposed key regulatory actions the Board had both proposed and adopted, would apparently be seeking to get me out of my job as a Member and Chairman of the Federal Home Loan Bank Board. While it may not have been illegal for Lincoln to make such efforts, as I perceived them, I believed at the time it was inappropriate to do so, under the circumstances. Further, no management or agent of any FELIC-insured institution had ever, to my knowledge, made such a contact or approach with anyone at the Bank Board to hire me.

September 19, 1986
Page 2

Begaune of my concern, and my understandable curiousity, as to
why
Chief Executive Officer of Lincola personally, in order to
agents, I asked Mrs. Paizbanks to meet with Mr. Charles Keating,
determine whether it was true that Lincoln wanted to hire me,
and why. Mrs. Faizbanks did have a meeting with Mr. Keating.
When she returned from that meeting, I remember her confirming
to me that, yes. Mr. Keating did want to hire me for some sort
of public relations job at Lincoln. Mza. Fairbanks, I recall,
also told so that she informed Mr. Keating I would have no
interent at all in working for Lincoln because, among other
things, my philosophy and that of Mr. Keating couldn't be more
different. Further, I recall her telling me she told Mr.
Reating that I was not available for employment, in any event,
I already had a job.

DECLARATION OF MARILYN J. FRIED

1. I am an attorney, licensed to practice law in the state of California and I am a partner in the law firm of Wyman Bautzer Kuchel & Silbert. I have personal knowledge of the facts set forth herein and could competently testify thereto.

2. During the course of the representation of American Continental Corporation, as debtor-in-possession in this Chapter 11 case, I was involved in the preparation of the document entitled Report by American Continental Corporation, Debtor-inPossession, in Aid of Examination and Reorganization.

3.

Attached hereto are relevant pages of several drafts of the report dated October 28, 1989; November 15, 1989; November 20, 1989; and November 29, 1989. These excerpts are from drafts of the report which were circulated to members of ACC management during the course of its preparation.

4. I have reviewed the attached documents and recognize the handwritten notes thereon as having been made by me during the time the report was prepared.

I declare under penalty of perjury that the foregoing is true and correct.

Dated:

• Apometu. 15, 1990

Maria

Fried

SPECIAL COUNSEL