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November 26, 1976 17 Gldg, Pee* we print with the union Also: Multi-copy service Lecture notes Collegiate Advertising 901 W. 24th St., Austin 477-3641 Call Today! Salinas, could cause it further problems. Salinas owned a majority of the stock at Citizens State Bank of Carrizo Springs, which was closed by state bank examiners last summer \(Obs., According to The Dallas Morning News, both state and federal examiners have criticized loans to Salinas at the Rio Grande City bank, as well as a participation loan to Bob Bullock and his real estate partner, Ken Wendler. Wendler, Travis County Democratic chairman and a possible mayoral candidate in Austin next year, borrowed $1.2 million with Bullock in November, 1973, to purchase 44 acres of commercial land in South Austin. At that time, Bullock had stepped down as secretary of state and had not yet run for comptroller. According to Buck Wood, Bullock’s top assistant in the comptroller’s office, Bullock and Wendler first asked Citizens for the entire $1.2 million, but that was too large a sum for Citizens to loan individually. So Citizens asked Bullock if he knew of any banks that might participate, or share, in the loan. Wood said Bullock told the bank to contact Clinton Manges, that he might be able to help. Bullock and Manges are “close personal friends,” Wood explained. Bullock represented Manges in his dealings with Gov. Dolph Briscoe after Manges made a $15,000 contribution to Briscoe’s campaign in 1972. The governor never reported the gift as required by state law, and he eventually returned it to Manges. Bullock and Wendler claim that they had no knowledge of the loan participation by the Rio Grande City bank. Wood said Bullock simply gave Manges’ name to the Austin bank, and no one informed Bullock about the resulting participation. The participation is between Citizens and the Manges bank, not between the borrowers and the Manges bank. \(Rumor has it that the Bullock and Wendler also point to an appraisal value on their land of $2.1 million as ample proof that their loan is a good one. The land was put up as collateral on the loan. They say they have paid all the taxes on the land, interest on the loan, plus $100,000 of the loan principal. There is no basis for criticizing the loan, they insist. Of course, bank examiners often flag loans to politicians, not to mention out-ofterritory loans to the bank owner’s friends. Enrique Salinas has done business with both of Manges’ banks. Groos was correspondent bank for the now-defunct Citizens State Bank. And Groos loaned Salinas $600,000 to buy a second bank in Carrizo Springs, Union State Bank. The trustee who sold the Union State stock to Salinas, Charles Gary of Dallas, has since sued Salinas and Groos for “wilfully and fraudulently” violating the terms of the purchase agreement. Gary wants $750,000 in punitive and/or exemplary damages because Groos released the Union State stock which had been put up as collateral on Salinas’ loan. Groos had a first lien on the stock as collateral for the $600,000 loan to Salinas and Gary had a second lien on the stock as collateral for a $277,520 loan to Salinas. But for some unexplained reason, Groos released the stock and Salinas put it up as security on another loan at First National Bank of San Antonio. When Salinas defaulted on the First National loan, that bank auctioned off the stock, leaving Gary out in the cold without collateral and without any payments from Salinas. There was yet another highly curious deal concerning Groos and Salinas’ Citizens State Bank. Shortly before Citizens State was closed, Citizens borrowed $1.25 million in fed funds \(excess cash one bank loans on As collateral, Citizens endorsed $1.6 million in local loans over to Groos. So far, so good. But Groos allowed the $1.6 million in loan paper to remain in the Carrizo Springs bank. The next bit is even stranger. On the day that State Dist. Judge James E. Kazen upheld the banking commissioner’s decision to close Citizens State Bank, Lindsay Langham, the senior lending officer at Groos, rushed out of the court hearing in Laredo and drove to Carrizo Springs. He went into the bank and removed the $1.6 million in loan papers, despite the fact that Kazen had ordered that no assets be removed. The Texas attorney general has filed a contempt motion against Langham because of his action. Jo Clifton, Kaye Northcott Good books in every field JENKINS PUBLISHING CO. The Pemberton Press John H. Jenkins, Publisher Box 2085 Austin 78768 watch subsequent issues for .. . BILLIE CARR REPORTS Paid Pol. Adv. by Billie Carr Expense Fund 2418 Travis, Houston, Texas. BROWSE TILL 10.:00 P.M. MONDAY thru FRIDAY Now In Our 13th Year of ‘omit* to Austin GARNER AND SMITH-1 BOSTORE I . 211. Guadalupe Austin, Texas MOS 477-9725 The U.S. House Banking and Currency Committee’s Subcommittee on Financial Institution Supervision, Regulation, and Insurance will hold two days of hearings on the Carrizo Springs bank failure and related matters Nov. 30 and Dec. 1 in San Antonio. Kelsay Meek of U.S. Rep. Henry Gonzalez’ office said that the subcommittee will “examine how various bank supervisory agencies worked individually and collectively” during the South Texas bank closing. “We’re interested in whether the regulators cooperate with one another. Do they exchange information? Do they follow up on their examinations? If the FDIC finds a problem, does the Comptroller of the Currenty help or hinder?” Meek said representatives of the FDIC, the Texas Banking Department, the Comptroller of the Currency, and the Federal Home Loan Bank Board will testify.