COURTESY AUSTIN EARTH FIRST’ Earth First!ers stage a theatrical protest at Circle C wonder whether Richards has already helped Bradley’s by signing a major foreclosure bill, House Bill 169, into law on April 1. One Capitol source claimed that members of her staff asked Rep. Jim Tallas, D-Sugar Land, to sponsor a bill that would help Bradley by allowing the borrower to be credited for the “fair market value” of a property rather than how much was bid for it if his or her property was foreclosed. Curiosity was stirred further when Tallas, chair of the House Financial Institutions Committee, introduced another bill, House Bill 2825, that extended the statute to include foreclosures forced by a judge, as in Bradley’s situation. Reta Cooke, Tallas’ aide, said the governor’s staff came to Tallas’ office looking for someone to carry foreclosure legislation, but only because it was Richards’ legislative liaison Jim Parker’s bill before he quit his job as state representative to work in the governor’s office. “There was no pressure from the governor’s office,” Cooke said. Bradley told the Observer he wasn’t involved with any of the foreclosure legislation and that it didn’t affect him. He admitted he spoke with Gov. Richards once about HB 2192, asking her to refer him to somebody on her staff who could help. But he said, “I never had a detailed discussion with the governor about any of the legislation at all.” Bradley hired representatives from four different law firms to draft the bill, and former state senators Kent Caperton and Bob McFarland to lobby for it. Just Bill It to the U.S. Taxpayer According to Bradley, his bill directly chal lenges the “sweetheart deals” made when failed thrifts were reorganized and sold to investors under the Southwest Plan. Under current law, these institutions retained all of the assets of the old thrifts, but none of the obligations of the old contracts. Bradley ar gued that legislators needed to change the law to hold these banks more accountable. In April, he told the story of Circle C to Senate and House committees to prove his point. Bradley said he and the 500 homeowners living on Circle C Ranch have been caught in the “ultimate catch-22,” in which First Gibraltar stands to profit more by sitting on the property than expending funds to help it prosper. Under First Gibraltar’s federal assistance agreement, Bradley said that the bank receives approximately $850,000 a month from the government just to have Circle C in its portfolio and received $60 million when the notes were discounted last year. While First Gibraltar attorneys disputed the developer’s claims, they have refused to disclose how much the bank has made off of Circle C. First Gibraltar certainly hasn’t lost anything on the ranch. When MacAndrews and Forbest Holdings Inc., an investment group run by Revlon chairman and corporate raider Ron Perelman, agreed to buy First Gibraltar off the government, they put up $315 million. In return, they were given $7.1 billion in good assets, a $5.1 billion guarantee over the next 10 years to cover the thrift’s bad assets, and tax benefits worth $900 million. According to Business, Week, the bank earned $129 million on assets amounting to $9.7 billion in 1989. Last year, First Gibraltar, with $8.86 billion in assets, received $374.8 million in government aid last year and earned $95.5 according to The Wall Street Journal. Legal fees are also guaranteed by the government, and Bradley has found that First Gibraltar exploits this source of funding to the fullest. “There is a fleet of attorneys that shows up against me every time I take a deep breath, paid for by the taxpayer,” he said, adding that seven were present at the last bankruptcy court hearing. According to the Houston Chronicle, 1,000 law firms collected a total of $615 million in Federal Deposit Insurance Corporation fees from banks last year. “They enter into a war of attrition with you. They know that ultimately, as the law is currently written, with their totally unlimited resources, they have no risk of loss,” said Bradley..”You ultimately have to give in and quit.” Banking lobbyists overwhelmingly oppose the bill, charging that it benefits only big developers and multimillion-dollar ventures. “This isn’t a bill aimed at John Q. Average Homeowner,” said Harris. Some argued that changing state statutes wouldn’t remedy the situation because federal law would preempt it. To this,Russell replied, “That may be true, but there’s one way to find that out for sure, and that’s to let ’em test it in court.” Karen Neeley, representing the Independent Bankers Association of Texas, claimed that the legislation would redline Texas, spurring the nation’s financiers to refuse to invest in the state. “It will really chill the acquisition of failed institutions or assets from the RTC,” she said. “No one will be willing to take them on because … it would be like buying a pig in a poke.” According to Harris, the state of Texas which has taken much of the blame for the S&L scandal would get another black eye as a result of this legislation. He said that what has happened to Bradley and other developers is a “tragedy, but the bottom line is, who is it that’s going to pay the deficiency in the Circle C development? That’s $43 to $63 million that has to be picked up by someone. We believe the someone in this issue is the RTC and the taxpayers of America.” Big Developers, Big Money Bradley had no problems finding politicians to take up the bill; many seemed to be familiar with his situation, if not personally, then through an associate. “The people fighting this bill represent the interests that lost the money in the first place,” Bradley noted. “The reason it gets labeled as a big development bill is that there are only a few people in Texas caught in the situation that have the resources to fight them.” At the House Financial Institutions committee, Rep. Ken Marchant, R-Coppell, and former Highway Commissioner Bob Lanier ror stories about dealing with banks with. House sponsor Russell told the Observer that a friend of his asked him to carry the legislation, but he refused to disclose that person’s name. Russell stressed that the bill addresses “definitely an inequitable situation, no question about it, regardless of what individual it is, whether it’s Bob Lanier or whether it’s John Q. Citizen who’s got a little five-home development or whatever. … It could apply THE TEXAS OBSERVER 1 1
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