(Consultation was had between the witness

and counsel.)

9. (BY MR. GALLAGHER) Let me just ask
you, because I think I'm reading from your
testimony; you correct me if I'm wrong: You
recall testifying before Congress on Tuesday,

November 21st, that, quote, "There was also at
STICKLEY & SCHUTZMAN, INC.

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Q. Did you believe that Black, and. Gray

were trying to hold Lincoln up as an example of

the evil that results from direct investment

excesses?

MR. MCALEER:

Objection.

THE WITNESS:

That is my conclusion now,

after three years of information coming to my

attention.

Q. (BY MR. GALLAGHER) Do you believe that Black and Gray tried to punish Lincoln for its vocal objections to the direct investment rule?

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THE WITNESS: This is one of those phrases where my choice of words was not very good.

I

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don't, I don't think "punishing" was exactly the
right word.

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I think using them as an example of a direct investment violator is a correct

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conclusion.

And I don't think that the use of the

word "punishing" was a very wise choice of words

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on my part.

STICKLEY & SCHUTZMAN, INC.

TELEPHONE 283-0435

NETWORK REPORTING SYSTEMS

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Q. (BY MR. GALLAGHER) okay. Would you

A.

I do not believe that had Lincoln

challenged the reg, without already being in
violation of it, that people would have had this
desire to hold them out as the example.

384

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The fact was there was a violation, and

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there was opposition to the regulation.
believe that those two things together were
intolerable to Mr. Gray. And I understand that.

And I

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Q. Well, at least part of it was because of the vocal objection, at least part of the reason for Mr. Gray's being upset in your view was the vocal objection to the direct investment

rule, correct?

THE WITNESS: I'm sorry. I didn't get the

question.

Q. (BY MR. GALLAGHER)

reaction to Lincoln was based on Lincoln's vocal

STICKLEY & SCHUTZMAN, INC.

Part of Gray's

The Committee has received a number of letters expressing concern that your participation in meetings with representatives of the Federal Home Loan Bank Board to discuss the board's review of the activities of Lincoln Savings was prompted by certain contributions made by Mr. Charles Keating, president of Lincoln Savings. Attached for your reference is a complaint filed by Common Cause.

The Committee would appreciate your response.

With best wishes,

Howell Heflin
Chairman

Cordially,

Wann B. Beech

Warren B. Rudman
Vice Chairman

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PAGE

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1ST STORY of Level 1 printed in FULL format.

Copyright (c) 1986 American Banker

November 3, 1986, Monday

SECTION: AMERICAN BANKER WEEKLY REVIEW; WASHINGTON MONDAY: Pg. 13

LENGTH: 477 words

HEADLINE: A Banker's Guide to the Elections

BYLINE: BY JAY ROSENSTEIN

SODY:

• Tuesday, American voters will choose 34 senators, 435 House members, and maybe, as a result, a new national policy on banking. Here's what to look for when the election returns come in.

* Control of the Senate: Whether the Democrats take control from the Republicans is the big question this year. Doing so would mean new Senate leadership and new committee chairmen. Sen. William Proxmire, D-Wis., could end up once again as chairman of the Banking Committee. Other possibilities are Sens. Alan Cranston of California or Donald W. Riegle Jr. of Michigan. A

Democrat-controlled Senate Banking Committee could mean less talk in that forum about expanding bank powers and more scrutiny of financial institutions and their regulators. Consumer issues and rental housing also could become priorities in the Senate. With Democrats in control of both the House and the Senate, there could be more cooperation between the two banking committees, but they might be more at odds with a Pepublican administration on banking legislation and matters such as nominations to the Federal Reserve Ecard.

• Some key Senate races: Seven of the 15 current Banking Committee members are up for reelection, but only Sens. Slade Gorton, R-Wash., and Mack Mattingly, R-Ga., are considered in much trouble. Chairman Jake Garn, R-Utah, will be reelected easily. Democratic Rep. Timothy E. Wirth, an outspoken cynic when it comes to expanded bank powers, is battling to become a Colorado senator and could end up on the Banking Committee.

• Some key House races: Banking Committee Chairman Fernand J. St Germain, D-R.I., facing allegations of wrongdoing, is in his first close race in years but should win reelection. Rep. George C. Wortley, R-N.Y., a banking supporter

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