Political Intelligence


Senator Phil Gramm makes no secret of his contempt for the Community Reinvestment Act, which requires banks to provide some lending to economically distressed areas. As chair of the Senate Banking Committee, Gramm has a lot more leverage and is using it to bust the C.R.A. He called C.R.A.-required relationships between banks and community organizations opportunities for communities to “blackmail banks,” and then began to compel community groups to turn over any information, correspondence, or documentation of relationships with banks – relationships sanctioned and even required under current law. Gramm has enlisted the the Federal Reserve, citing a Fed regional governor complaining that C.R.A. loans have a default rate six times higher than non-C.R.A. loans. (Committee counsel Dina Harlan said there is no proof of a high default rate but said the Committee is looking for it.)

The C.R.A. is unpopular with many banks, who buy heavily into the House and Senate banking committees. Gramm’s claims of extortion might seem familiar to bankers and bank PACs writing checks to the Gramm campaign. His cozy relationship with bank PACs was even the butt of an April Fool’s press release issued by the public interest group Bank Watchers. Struck with guilt, the release read, Chairman Phil Gramm had decided to return thousands of dollars in campaign donations from financial services firms, because he had concluded they are tantamount to bribery payments. Gramm was “quoted”: “Because of my recent focus on the issue of extortion and because I have received sizable contributions from the PACs of companies that have an interest in legislation that comes in front of the Banking Committee, I now understand that this kind of behavior should be illegal.”

Inner City Press, based in the South Bronx, has gleaned Gramm’s 1996 bank-related contributions from Federal Elections Commission filings and found that the Senator received $226,056 from seventy-seven political action committees formed by banks or financial services companies. Inner City’s website, dedicated to the C.R.A. and Gramm’s assault on it, is www.innercitypress.org, with the Gramm PAC numbers at www.innercitypress. org/grammfin.html.


From March 29 to April 1, more than two dozen residents of Valley towns and Eagle Pass filled Judge William Wayne Justice’s federal courtroom in Austin. They were former employees of Case Farms, a Winesburg, Ohio, poultry processing plant. Four of them presented live testimony about what happened when they went to work at Case Farms. Twenty-seven plaintiffs, twenty-six of whom are represented by Texas Rural Legal Aid, have alleged that after Case Farms lured them to Ohio with promises of furnished housing, transportation, and a food allowance, nothing of the sort was provided.

Instead, said plaintiff Michelle Galván, who worked for Case Farms for a few months in early 1996, she found herself living for weeks in an unfurnished, inadequately heated, one-bedroom house with two other women and anywhere from twelve to twenty men. Galván applied to work for Case Farms in January 1996, after hearing an ad on the radio in the Valley. At the Holiday Inn in McAllen, representatives from a hiring firm that has since disappeared told her about the job and the benefits. “It sounded really good,” she recalled. The next day she began the three-day journey to Ohio, in a pickup truck with five other new hires. Once there, she and the two other women living in the jam-packed house always showered as a group, with someone guarding the door – since there was no lock – and slept (on the floor) in a protective line extending from the wall, with a man they knew on the outside edge. “I didn’t know what to expect. I was sleeping in fear – really, I didn’t sleep.” Case Farms was a forty-five minute drive from the house, recalled Galván, and she and other workers were ferried there in an unheated, ramshackle van whose windshield was often covered with a thick coating of ice.

According to T.R.L.A. attorney Lisa D’Souza, workers had to live with “overcrowding, no heat, no water, no furniture.” Some were placed in housing so cockroach-ridden that at times they slept with windows open to numb themselves against the feel of the roaches crawling over them and into their ears. Case Farms, the lawsuit alleges, committed ten different violations, including breach of contract, providing substandard living conditions, and making certain deductions, illegal under the Fair Labor Standards Act, from workers’ paychecks.

Prior to the March trial, Case had argued that the Migrant and Seasonal Agricultural Worker Protection Act do not apply to a poultry processing plant. The court denied Case’s request for summary judgment. “This is the first time a court has ruled that a poultry processor can be held liable” under the act, says D’Souza. Post-trial briefs and responses are due by May 1, and a decision is expected some time in the next couple months. Says D’Souza, “We feel pretty confident that we established [Case Farms’] liability, and damages for our clients.”


One problem in using lawsuits to illustrate “lawsuit abuse” is that plaintiffs’ lawyers sometimes know the cases. The Texas Association of Business and Chambers of Commerce mailed a pamphlet describing a case in which an off-duty policeman entered a gas station to stop a robbery, was shot with the clerk’s gun, and when the officer’s family sued because “the presence of the gun caused the officer’s death” the gas station owner was left to pay. Unfortunately they missed a few facts. The Texas Trial Lawyer’s Association checked the record: in fact, the off-duty officer did not sue the gas station and was not shot. He shot and killed an individual on the premises. And although there might have been a gas station nearby, the shooting occurred at an apartment complex. Trial Lawyer President Hartley Hampton suggested that House members called to vote on the law the business groups are promoting in their mailing might consult Houston Representative Harold Dutton, who tried the case. The T.A.B. and Chamber lobbyists also slipped up on facts in another case, confusing Houston with San Antonio (a common error). And the two men referred to as “criminals” in the pamphlet were actually defendants who had never been indicted. Dutton doesn’t have grounds for a lawsuit, but perhaps the two men identified as “criminals” have a cause of action and might look for a trial lawyer. (See: “So Sue Yourself,” Bad Bills, page 16).

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Published at 12:00 am CST