24 and to walk them through the hundred thousand pages of dea mentation that we eventually provided to them. The FDIC is also considering bringing a case to recover damage We have provided documentation and analyses to their staff. We would also like to acknowledge and thank the FDIC who pr vided assistance to our investigation as a result of the efforts the they have been engaged in. The U.S. Attorney and the FIC received 40 transcripts of swor testimony from us and 35 boxes of documentary evidence. This c is typical of many investigation that involve the joint efforts an resources of many offices of OTS, staff in Washington and the D trict offices. Our goal is always to immediately obtain control of the instit tion and then to pursue administrative actions against individual Even after our administrative responsibilities are over, we continu to provide support to the Department of Justice and to the FDIC assure the maximum recovery of funds and the punishment those who committed crimes. Thank you, Mr. Chairman. [The information referred to can be found in the appendix.] The CHAIRMAN. Thank you, sir. Mr. Paul. STATEMENT OF DAVID L. PAUL, COMMISSIONER OF FINANCIAL SERVICES, COLORADO DIVISION OF FINANCIAL SERVICES Mr. PAUL Thank you, Mr. Chairman, Members of the committee My name is David Paul, and I am the commissioner of Financia Services for the State of Colorado. I am here today to discuss the role of the State regulatory agency that I head, the Colorado Din sion of Financial Services, in the examination, supervision an eventual closing of Silverado Banking, Savings and Loan Associa tion. Silverado was chartered under the laws of the State of Colorad in 1956 and remained under State charter until its closing on De cember 9, 1988. Therefore, the Division was its chartering regula tor. In addition, because Silverado's deposits were insured by the Fed eral Savings and Loan Insurance Corporation from Silverado's ception, it was also subject to the comprehensive examination, pervisory and regulatory authority of the Federal Home Lose Bank Board as the operating head of the FSLIC. Thus, there existed a shared responsibility between State and Federal regulators for the examination and supervision of Silver ado. Throughout the time period under discussion today, essentially the 1980's and much earlier as well, this shared responsibility implemented through a cooperative examination and supervision program among the division, the Federal Home Loan Bank Board and the Federal Home Loan Bank of Topeka. This means that all examinations of Silverado were joint nations. That is, State and Federal examiners worked together produce one examination report, supported by one set of w papers, that satisfied the requirements of both the State and Feder al regulatory agencies. SILVERADO BANKING, SAVINGS AND LOAN ASSOCIATION HEARINGS BEFORE THE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS HOUSE OF REPRESENTATIVES SECOND SESSION PART 1 MAY 22 and 23, 1990 Printed for the use of the Committee on Banking, Finance and Urban Affairs Serial No. 101-124 US. COVERNMENT PRINTING OFFICE WASHINGTON: 1990 For sale by the Superintendent of Decuments, Congressional Sales Office TUESDAY, MAY 22, 1990 Creager, Robert E., partner, Coopers & Lybrand Hershkowitz, Stephen P., deputy director of Enforcement, Office of Thrift McCormally, Brian C., district counsel. Office of Thrift Supervision. Topeka.. Sandefur, Terry, assistant deputy district director, Supervision. Office of Van Cleave, Dorothy, assistant deputy district director, Examinations, Office Weinstein, Harris, chief counsel, Office of Thrift Supervision. Wullschleger, Herb, partner, Ernst & Young. 145 236 141 220 ADDITIONAL Material Submitted for the RECORD Anonymous letter dated October 25, 1988, to M. Danny Wall and Kermit 531 Background information for Silverado bearings provided by minority staff ....... 187 202 Office of Thrift Supervision: Joint statement of Stephen P. Hershkowitz, Brian C. McCormally, Terry 274 News Releases dated January 10, 11, 19, 23 and 28, 1990. 192 Index of Key Supervisory Actions.. Silverado Banking, Savings and Loan Association: Holding Company Loan charts.. Loan Pool chart Overview... Quid Pro Que Program charts. Supervisory Chronology. Silverado Hypergrowth chart (II) Examination History from January 1980 to December 1988. 172 164 173 168 155 166 175 162 Silverado Banking. Savings and Loan Association-Continued Silverado Self-Funding Capital Transactions Information provided by OTS on Silverado's transactions with Bill L. Walters Memorandum dated January 18, 1990, from OTS enforcement and the Topeka District Office to the ERC regarding recommendation for action in respect of Neil M. Bush Memorandum dated February 17, 1988, from Jack Grace and Dennis Lacey, Coopers & Lybrand, to office files, regarding a meeting with Silverado management....... Questions for Mr. Paul submitted by Hon. Bunning Supplemental submission, charts prepared by Office of Thrift Supervision.... WITNESSES WEDNESDAY, MAY 23, 1990 Bunchman, Richard J., former director, Silverado Banking Prepared statements: Annunzio, Hon. Frank.. Gonzalez, Hon. Henry B.. Correspondence with witnesses. APPENDIX Additional Material SubmITTED FOR THE RECORD 202 Excerpt from GAO Report on Thrift Failures; Officers and Directors Breached 622 Internal memorandum dated February 23, 1987. regarding significant loans declined by Silverado banking, submitted by Hon. Parris.. 569 Letter dated November 5, 1986, from Neil M. Bush to Michael Wise regarding a $900,000 line of credit for Good International 629 Office of Thrift Supervision Manual: Director Information Guidelines. 571 550 Wise, Michael, memorandum and letter dated July 15, 1985 regarding Neil M. 567 52 Mr. KANJORSKI. Certainly. Mr. ANNUNZIO. In your briefings to the staff, when you briefed the staff, you said at that briefing that you were going to supply the committee with all the information on these briefs. Now, has happened since you told the staff you were going to supply the information of the briefings to the committee? Mr. HERSHKOWITZ. I have received different instructions. Mr. ANNUNZIO. You received different instructions. In other words, somebody is interfering with this hearing? Mr. HERSHKOWITZ. I received different instructions. If you beliem that is interference, that is interference. The CHAIRMAN. If the gentleman will yield to me, I don't think it is quite fair to the witness. The gentleman has suggested that pursue this. Well, the chief counsel under whose direction be acting is here. If he is willing, we would bring him forth and have him give the administrative reasons which to a certain extent we do expect. Mr. KANJORSKI. And Mr. Chairman, the name of the individual in the Justice Department that is carrying on this activity. The CHAIRMAN. Well, there, I think the best thing is to wait until we summon the Attorney General. We intend to have the At torney General testify before the committee sometime. Mr. KANJORSKI. Mr. Chairman, I suggest the Attorney General may have forgotten and may not have been knowledgeable on that term, and we have to pursue this going up the ladder rather than hoping to come down, where he can say I just don't remember. The CHAIRMAN. We would hope that by the time he accepts our invitation to appear, now we have tried earlier―― Mr. KANJORSKI. Are we assured that we can gain his access to this committee, or will he take executive privilege? The CHAIRMAN. Well, I don't know. It depends on what it is that the Members will be seeking to find out at the time, and how that is defined. There is a clear line beyond which even I would recom mend that it would not be proper to go. But we have the chief counsel, and I think he can round out this explanation. Mr. WEINSTEIN. Thank you, Mr. Chairman. The CHAIRMAN. Will you stand also and be sworn? Mr. WEINSTEIN. Yes, sir. [Witness sworn.] The CHAIRMAN. Will you please give your name and title to the reporter, so that she will have it on the record. STATEMENT OF HARRIS WEINSTEIN, CHIEF COUNSEL, OFFICE OF THRIFT SUPERVISION Mr. WEINSTEIN. Yes. I am Harris Weinstein; I am chief counsel of the Office of Thrift Supervision, and I have held that position since May 7 of this year. Let me address the question of criminal investigations and issues relating to that. There are, as the attorneys on my staff have indi cated, a number of criminal references pending in this matter They have been given to the Justice Department at various times over a period of years, beginning early in the investigative proces and continuing I would say up until this year. |