by 1,600 percent from 1982 to 1986 his liabilities had grown even faster; 96 percent of Vernon’s $1.3 billion loan portfolio was delinquent. Dixon’s distinction, however, is that he got into trouble before the region’s economy soured. In October 1983 federal examiners noted Vernon’s “significant regulatory violations, unsafe and unsound practices, lending deficiencies, inadequate books and records, and control problems.” In August 1985, bank examiners wrote, “Vernon [is] out of control.” On July 15, 1986, after state examiners uncovered a host of unsavory business practices at Vernon its habits included falsifying reports to federal examiners to avoid reporting delinquent loans and swapping bad loans with insolvent thrifts to keep a step ahead of examiners the bank board issued a cease and desist order. Three weeks later a supervisor appointed by the bank board to keep tabs on Vernon raised questions about “possible criminal actions by management officials.” Finally, in October 1986, Vernon’s board of directors told the supervisor that they had been “lied to and deceived” by Dixon and other officers, all of whom have since resigned. In late November, with his flying house parties long since discontinued, and with the feds closing in on him, Dixon took one last step. He called Wright. Once again, Wright called Ed Gray, the chairman of the bank board. “I said, `Ed, I don’t know anything about this guy. I don’t know anything about his situation. But I’m telling you what he said to me,”‘ Wright recalled. “And Ed said, ‘There’s no way. They can’t close him down.’ And I said, ‘He thinks they will. Would you mind looking into it?’ ” AS IT BECAME CLEAR TO Wright that he couldn’t get Gray to make a deal with Dixon, he dedicated his considerable energy and clout to ensuring that Gray’s regulators wouldn’t get the funds they needed to close insolvent thrifts. In late January Wright invited the chairman of the House Banking Committee, Fernand St. Germain, and , 11 other Democratic members of the committee to discuss the pending FSLIC bailout legislation. St. Germain wanted to push the bill, which would provide $15 billion for the depleted fund, through the House. But after meeting with Wright, St. Germain canceled a scheduled subcommittee meeting in which the bill was to have been approved and sent to the full banking committee for a vote. According to the Wall Street Journal, St. Germain met with the Democrats in his committee, and the group decided to send investigators to Texas to hold further hearings on the bill. \(A day’s worth of these hearings were subsequently canceled when St. Germain learned that William Black, the bank board’s chief counsel, planned to testify that some thrifts, especially in Texas, were less the victims of $11-a-barrel oil than they were the victims of gross In February, with his banking committee still behind him, Wright once again approached the bank board on behalf of Dixon. This time, instead of dealing directly with Gray, the Speaker summoned Black and two officials of the Dallas Home Loan Bank, Roy Green and Joe Selby, to his office. Wright’s friend, Mallick, was also present. When Black contradicted Wright’s reconstruction of events in the Vernon affair, the Speaker lost his temper and began to scream. The meeting ended abruptly. When the bank board finally closed Vernon’s doors on March 20, 96 percent of its loans were in default and it had a negative net worth of at least $350 million. Still, Wright was ticked off at the regulators. He retaliated by refusing to support a FSLIC bill larger than $5 billion, even though industry analysts estimated that nearly $50 billion might be needed to close ailing S&Ls and to refund deposits and that the administration was willing to support a compromise bill of $15 billion. On April 27, the FSLIC filed a lawsuit seeking $540 million in damages against Dixon and six other former officers of Vernon, the largest such claim the agency has ever filed. The following day, with the kleig lights of the national media burning brightly upon Dixon, Wright, in what the New York Times called “a startling reversal,” changed his stance. He would support the administration’s $15 billidn bailout plan. Dixon never did find his white knight. By the time the FSLIC closed Vernon, its $350 million debt had almost doubled. And by last month, when the bank board announced on November 19 that it finally had sufficient capital to . liquidate the institution the $1.3 billion bailout in cash and notes was the largest ever for a thrift Vernon’s loan losses had reached an estimated $750 million. Dixon now spends spends much of his time in courtrooms. In addition to the FSLIC lawsuit and his personal bankruptcy proceedings, he is embroiled in at least 38 other lawsuits. A federal grand jury in Dallas is expected to indict him on fraud charges in the near future. WHY DID WRIGHT RUSH to Dixon’s defense? Wright told American Banker, a daily trade newspaper, that he had no personal knowledge about the relative solvency of [Vernon] or any other S&L,” and added, “If an institution is failing, the depositors must be protected.” But there’s no evidence to suggest Wright hog-tied federal regulators for the sake of the nation’s thrift depositors. The depositors, after all, are the losers if the FSLIC, which Wright almost single-handedly sabotaged, is unable to repay them in a timely manner. This seems likely, since Congress has authorized the FSLIC to float only $10.8 billion in long-term bonds to bail out the thrift industry more than double the limit Wright lobbied for but far less than is needed to save the troubled thrifts in his home state alone. Whatever his motivations were, the evidence suggests that Wright’s intervention on behalf of Dixon was but the latest example of a pattern that has been maintained throughout Wright’s 40-year political career a pattern that continues even though he’s the Speaker of the House and no longer represents merely the 12th district of Texas. It’s a pattern of old-fashioned venality, financial murkiness, conflicts of interest, oily opportunism, and abuse of power. Though they were cut from different cloth, Wright and Dixon have much in common, starting with their resentment of the power exercised by non-Texans over Texans, especially by federal regulatory forces. They see conspiracies in the regulatory system, which they regard as evil, and share a passion for shady dealings. Each grew up in a small town in north central Texas, and each knew from childhood what he desired most. For Wright, it was the power he came to hold when he was elected Speaker last December; for Dixon, it was the enormous wealth he gained so quickly and which, by the end of last year, he knew he was soon to lose. Though they pursued different ends one power and the other money perhaps they’re not so different. Maybe it’s not a coincidence that the Justice Department is trying to figure out what they both were up to. El Copyright 1987 by Regardie’s magazine. All rights reserved. Reprinted, in slightly abridged form, from the December 1987 issue by special permission. THE TEXAS OBSERVER 13
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