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r. Savings and loan commissioner Alvis Vandygriff, right, chatting with Jerry Knippa, president of Texas Savings and Loan Association, during the Senate hearing on SB 134. Meet your watchdog The Savings and Loan Department, the official regulator of the industry, lists its address as 1004 Lavaca here in the capital city. But that site turns out to be a parking lot for Austin Savings Association, located at 1006 Lavaca. The Observer inquired inside Austin Savings about the whereabouts of the watchdogs: “Oh, yeah, they’re in the little building at the back of our parking lot,” a clerk replied. Indeed they were and their “tradesmen-use-back-entrance” proximity to this large S&L fairly reflects the role the regulators play. Take a look at the agency’s chief administrator, savings and loan commissioner L. Alvis Vandygriff. You’ll not meet a more genteel or smoother-spoken head-of-bureaucracy in Austin, but peek beneath that amiable surface and you’ll discover a man who works hand-in-glove with the lending firms he oversees. Though a man in his position might be expected to reach an independent judgment on the merits of raising Texas homeowners’ interest rates. Vandygriff has been on Austin radio in the last two weeks making exactly the same pitch the S&L lobbyists are delivering to the Legislature. Perhaps it’s just a matter of brilliant minds coming to the same conclusion. One reason this protector of the public seems to think like a lender may be that he is a lender, in the sense that he has a substantial personal stake in the fortunes of home-loan institutions. Vandygriffs latest report on his financial holdings shows that he owns a block of stock inyou guessed itAustin Savings Association. He told the Austin American-Statesman that he had actually sold those shares in July ’77 when he became commissioner, but apparently he did not deem it a conflict of interest to hold the stock for the six previous years, while he was only deputy commissioner. Vandygriff still has certificates of deposit in Austin Savings, First Federal S&L of Austin, and Landmark Savings Association in Ennis. He also owns shares in First Bancorp in Corsicana, First City Bancorp in Houston, Guaranty National Bank of Houston, Republic National Bank of Austin, and Texas Commerce Bancshares in Houston. J follow suit. On February 11, the Houston Chronicle ran a column by the president of the Greater Houston Builders Association calling on “builders and buyers alike” to write their legislators in support of the increase. The next day, Houston Mayor Jim McConn, who is up for reelection this fall, chose a meeting of the city’s Mortgage Bankers Association to declare his support for eliminating the usury ceiling. Four days after that, Lt. Gov. Bill Hobby, a Houstonian whose re-election bid last year was underwritten by $15,000 from lending and builder interests, announced that he favored no limit on interest rates to homebuyers, offering this one-liner as an explanation for his position: “I think the state ought to get out of the business of trying to regulate the cost of money, just as the federal government ought to get out of the business of regulating the price of oil and gas.” A closer look The drive for higher rates by Texas lenders .could backfire on them. It has attracted public attention to the high rates they already charge and the ample profits they make, and has spurred consumer and labor groups to question other to pay interest on the escrow funds they their use of “points” to inflate real intertheir imposition of penalty fees on mortgage borrowers who repay their of closing fees that tack several hundred dollars onto the actual cost of a home. Rush to judgment Take heart. Not everyone in the homebuilding and selling industry is going along with the party line. George Sandlin, for example, is president of the Texas Association of Realtors, and even though many TAR members and the association’s lobbyists in Austin are working to increase interest charges to Texas homebuyers, he is not convinced the move is at all wise. “I think they’re being a little panicky,” Sandlin said of those who argue that failure to raise rates will depress the housing market, throwing realtors out of business. He mentioned to the Corpus Christi Caller a TAR poll that shows 85 percent of the Texas public already blames real estate agents for high interest, and he figures that the rate increase will just make that perception worse. Further, he doubts that people will pay the higher rates, and anticipates that home sales will decline as a result “Every time you raise the interest rate one-half of one percent you drop 50,000 qualified buyers in the state of Texas,” Sandlin told the Caller. The state’s independent bankers also are less than enthusiastic about the idea, 8 MARCH 2, 1979 though their Austin lobby does not intend to campaign against it, for to do so would pit them against other large lenders whose good will they need. But one independent says that he polled 25 or so of his colleagues at a recent meeting and didn’t find a single one who felt the mortgage interest ceiling should be raised, primarily because they all felt banks were doing very well without it. Even legislators with apparent conflicts of interest are not necessarily behaving accordingly. Rep. Dan Kubiak of Rockdale, for example, is a homebuilder and might logically be expected to fall in line, but he has not: “If we raise the rate to 12 percent, I’ll be eating the homes I build,” he told the Observer, adding, “The whole problem started when we began to treat money as a commodity instead of as a medium of exchange.” Then there’s Rep. Stan Schlueter of Salado, who works for his family’s realty business. In the last issue, the Observer put him down in an “accounts receivable” list for having taken $1,500 in industry campaign contributions. That amount turns out to be from realtors in the familyand what’s more, says Schlueter, he makes a point of not accepting PAC funds from industry, he is opposed to the interest rate increase, and he has been taking all sorts of guff from other realtors for breaking rank. We regret having swept him along in our broadbrush indictment: Raising interest rates is one of those solid, pocketbook issues that defies con ventional political wisdom, and one never knows who is going to rise to the occasion. For the moment, the headlong gallop to pass this onerous bill has been slowed, and it’s no longer an impossible dream to think it might be stopped en tirely. There may be more populist blood in the Legislature than anyone expected. J H