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FILE PHOTO Friends in wealthy places Mainland had enough assets to be worth the cost of pursuing. If that judgment was right, Hill must have been spending what was effectively the U.S. Treasury’s money awfully fast. During his four years as chairman of Mainland, Brewton learned, Hill had been paid $4,320,000 in dividends, salaries, and various legal fees. \(Hill told me that this figure counts all -legal fees paid to his firm, most of which, he said, went for overhead, and the salaries of other lawyers. He said the fees, dividends, and salary he received were modest, though he After the collapse, Hill went back to practicing law and teaching Sunday School at his Episcopal church, though he says he now no longer leads Bible classes. He says he is now so “broke” he must wear clothes in need of mending and drive a car with more than 100,000 miles on it. Hill’s friend James Baker used to play tennis regularly at the Houston Country Club with another prominent local citizen, George Bush. Bush and Baker were part of a younger crowd that revitalized the Houston C.C. in the 1950s when its more prestigious cross-town cousin, the venerable River Oaks Country Club, grew full. Bush and Baker socialized at the Houston C.C. with Walter Mischer, a developer and banker at the pinnacle of Houston society. Mischer was and is perhaps the city’s most powerful behind-the-scenes political mover and shaker. Bush got to know Mischer well in about 1962, when Bush was testing the waters for a run at Congress. Baker, Bush, and Mischer also sent their children to the Kinkaid School, an exclusive private institution Baker had himself attended, where they were active in school affairs. “I saw them all the time,” Mischer agrees. By the time of the 1980 campaign, they were close enough that Mischer raised $3.2 million more than any other American for the Reagan-Bush campaign, of which Baker The Bush and Mischer families have stayed close. Mischer’s son and Neil Bush are friends. Mischer says the president and Mrs. Bush often visit his development in Houston’s lush outskirts when they return to town; it’s right next to the Houstonian Hotel, where George and Barbara Bush legally reside. In fact, when the Bushes returned to vote in the Texas primary this past March, the president and his wife strolled over to inspect a home built for sale by Mischer’s daughter, Paula. In 1990, when the Office of Thrift Supervision tried to sanction Neil Bush for his role in the collapse of Silverado, the Denver S&L of which he was a director, the president’s son called on the former general counsel of .Mischer’s bank as his expert witness at the hearing. Neil Bush was accused of not telling his fellow directors about the income he was getting from Silverado borrowers who were investing part of their money in his unsuccessful oil company. From other reporters, Brewton learned that these investors had provided Neil Bush with a $120,000-a-year salary, hired him as an outside corporate director for $100,000 a year, and given him a $100,000 gift in the guise of a loan he needn’t, and didn’t, repay. Brewton calculated that more than half a million dollars was put into Neil Bush’s pockets, and lots more invested in his company, by borrowers from Silverado who then didn’t repay their loans, so that effectively the payments to Neil Bush were from taxpayer funds whose disbursement he helped supervise as a director of Silverado. But when regulators tried to call the President’s on on this, the Mischer bank’s former lawyer cooperatively testified on Bush’s behalf, saying a bank director didn’t have any obligation to tell his fellow directors of his own interest when he asked them to approve a loan that might secretly benefit him personally. Bush was let off with a promise to avoid conflicts of interest at any future S&L meetings. Walter Mischer’s ex-lawyer had good reason to take a lax view of responsibility for the savings-and-loan debacle. Mischer himself was involved financially and socially with people who ran many S&Ls that failed at taxpayer expense. He was always separated by some other person from anything that smacked of outright illegality. And he has never been charged with a crime. But without what Mischer and his banks did, the American taxpayers would be a lot richer. And without the American taxpayers, Mischer would be a lot poorer. Much of his contact was as chairman and major shareholder \(over 5 pering company. \(It was sold in 1988 to a CaliforniaFor example, Allied, the lead b .ank in Mischer’s group, among the largest banks in Houston, financed Raymond Hill’s stock in Mainland Savings. Altogether, Mischer’s banks provided the capital for the control of S&Ls whose failure cost the taxpayers more than $1 billion; the figure can’t be calculated precisely from information so far disclosed by the government. But Mischer’s banks got paid back, selling off their S&L loans before the institutions collapsed. The S&Ls that Mischer provided financing for ultimately provided benefits for him. For example, when a borrower at Allied Bank went bankrupt, sticking it with $2.1 million -in defaulted oil and gas leases for which it couldn’t find a buyer, Mainland paid Mischer’s bank 90 cents on the dollar for leases. This was a highly unusual deal for a savings and loan. Attorneys in the bailout estimated that buying the leases lost Mainland and thus the taxpayers at least $14 million. \(Mischer says he doesn’t remember the transaction, and that he spent most of his time trying to drum up business for his banks, leaving daily operation to subAnd George Bush’s friend Mischer, like James Baker’s friend Hill, dealt with mobsters. Mischer acknowledges having sat down to business once with Carlos Marcello, the well-publicized New Orleans-based Mafia boss of Louisiana and Texas since the 1940s and member of the Mafia national commission; Mischer says Marcello wanted to buy two Houston motels from him. Mischer also says he turned the deal down, though the Houston police told Brewton that the man who then bought one of the motels John Coil, a disbarred attorney and convicted pornographer was part of Marcello’s organization. \(Mischer says he was Mischer agrees that while he held the deed to the motel, and Coil paid for it over time, it was converted into a trysting spot with in-room videos not rated for family values. Mischer says he met Marcello only that once. Cops assigned to tail Marcello whenever he came to Houston told Brewton they observed him meeting Mischer more often. He denies it. Whatever Mischer’s relationship with Marcello personally, however, there is no question that Mischer’s banks had significant dealings with a Marcello family associate from Louisiana, Herman K. Beebe. In the 1970s, Beebe was one of the first vacation-home residents of La Costa, the Southern California resort financed by the Teamsters’ 12 DECEMBER 11, 1992