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Mr. Hyde and the Clyde S&L


In news articles published in late October 1998, the American people finally began getting some information on role of a prominent Republican politician in the looting of our Savings and Loans during the 1980's -- a looting that has cost the American people nearly half a trillion dollars.

 

Clyde Federal Savings and Loan

On February 1st, 1990, the second year of the Bush presidency, Clyde Federal Savings and Loan, a Chicago-area savings and loan, collapsed with bailout costs to the American taxpayer of $67 million dollars. Subsequently, in April 1993, the Republican-controlled Resolution Trust Corporation sued Republican congressman Henry Hyde and other outside directors of the S&L's board for negligence in running the thrift during the 1980's. Hyde had served on Clyde's board from December1981 to July 1984 and had been specifically identified as having participated in a number of board decisions which had ultimately resulted in the loss of $14 million dollars for the S&L.

 

A Statement of Particulars

In January 1997, after the FDIC had announced a ludicrous settlement of the federal law suit (see below), the Congressional Accountability Project (CAP) sent a letter to the Chairman of the FDIC severely criticizing the FDIC for not going into pre-trial discovery on a number of the losses to the S&L and several questionable practices during Hyde's tenure. The letter cited a number of things, the most important being:

Item: $10 million dollars loss in options trading from a September 1983 decision.

Item: The proposed purchase of Grand Cayman CDs from a suspect securities trader, Swink, in Little Rock was seconded by Hyde in a board meeting on May 17, 1982. Additional securities were purchased in October 1982. The CAP letter posed several questions to the FDIC on the relationship between the Clyde directors and Swink at this time.

Item: A proposed authorization of below-market rate loans to directors and officers of Clyde was seconded by Hyde at a board meeting of September 27, 1982.

Item: On February 27, 1984, Hyde and the other Clyde directors voted unanimously to purchase $5 million dollars of a $28.5 million loan needed to build a luxury condominium project in Port Aransas, Texas. Clyde lost $3.7 million dollars on this loan, which was brokered by J. William Oldenburg, a major player in the S&L debacle of the Reagan-Bush years. The CAP letter asked several pointed questions about the relationship between Oldenburg and Clyde's directors. Oldenburg's S&L, State Savings of Salt Lake City, Utah was shut down in 1985 at a cost of $416 million dollars.

 

A Sweetheart Deal for Clyde became even sweeter

The RTC lawsuit against Hyde and the other outside directors was for $17.2 million dollars. If the federal government had won the lawsuit in the total amount, the taxpayers would have received about

26 cents

for every dollar looted from the S&L. Interestingly enough, the FDIC, which had taken the case over from the RTC when that agency went out of existence at the end of 1995, announced it had settled the lawsuit on November 19th, 1996. The amount of the settlement: $850,000 dollars, or about

1.3 cents

for every dollar looted from the S&L. For some reason, Mr. Hyde did not participate in this settlement, and therefore got off

scott-free

in the law suit.

 

A curious pattern

Among other things, the January 1997 Congressional Accountability Project letter to the Chairman of the FDIC complained about the FDIC decision and noted, the unusually low number of prosecutions of Illinois RTC cases and other indications of a highly-selective process at work:

"Clyde falls into a curious pattern of unusually low levels of prosecutorial activity in Illinois RTC cases. According to a General Accounting Office (GAO) report on thrift failures, 24% of all RTC thrift institution cases nationwide spawned a criminal case. In some states, the percentage was much higher. For example, in Florida, of 46 RTC thrifts, 20 had at least one criminal case associated with the thrift, or 43% of all RTC Florida thrifts. Yet, in Illinois, only 3 of 48 RTC thrifts had an associated criminal case, or 6% of all Illinois RTC thrifts. That is one-fourth of the national prosecution rate for RTC thrifts. Illinois had the lowest prosecution rate of any of the 22 states with over 10 RTC thrifts."

 

How the Mainstream Media Finally Discovered Clyde and Hyde

The reluctance of the Mainstream Media to cover the Republican role in the looting of American savings and loans has been amply documented on other pages of this web site. The present story came to light only because of the mysterious circumstances surrounding the role of a private detective in acquiring documentary evidence on Clyde's collapse from an Illinois bank consultant, Tim Anderson.

Anderson began investigating the looting of American S&Ls after an S&L in his home town failed. He in fact was the person who provided reporters with the documents showing that Hyde had approved two specific Clyde board decisions resulting in the direct loss of $14 million dollars. In 1995, it seems that Mr. Hyde's lawyer hired a private investigator to find out just what Mr. Anderson had on the failure of the Clyde S&L. The private investigator posed as a television producer and obtained 400 pages of material relating to the Clyde failure. He then copied these pages and sent them on to Mr. Hyde's attorney. There is some question of the source of the funds used to pay the private investigator, some $10,000 dollars. Did it come from Hyde's legal defense fund or was it a gift financed by a friend of Mr. Hyde? If it was a gift, then Mr. Hyde may have received an improper gift, and as such, is subject to an investigation by the House ethics committee.

 


Sources:

  1. Washington Post, October 31, 1998, page A06 - article by Juliet Eilperin.
  2. Article by Damon Chappie, October 27(?), 1998
  3. Congressional Accountability Project letter to the FDIC, January 24, 1997.

 

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