Posted on 10/02/2002 5:51:46 AM PDT by Theodore R.
Perry releases documents on Tesoro
Associated Press
AUSTIN (AP) - Tesoro Savings and Loan, the failed thrift once owned by Democrat Tony Sanchez, did not always comply with government supervisory requirements even as it was failing in the late 1980s, records show.
Government documents distributed Tuesday by the campaign of Republican Gov. Rick Perry state that after Tesoro was placed in receivership, it violated supervisory rules.
Tesoro failed in 1988, requiring a $161 million federal taxpayer bailout. No lawsuit or charges were filed against Tesoro officials over the collapse, and Sanchez paid $1 million to settle the matter.
Perry, quoted in Tuesday's Austin American-Statesman, said the records his campaign released about Tesoro are relevant to the governor's race.
"It's clear that the official documents are showing you that the savings and loan fell because of mismanagement, conflicts of interest and risky business practices. Not, 'Gee, we were in the wrong place at the wrong time and everyone else was failing,' " Perry said.
Perry said the documents show that Tesoro continued improper practices even after state and federal regulators ordered it to stop.
Sanchez, who was the thrift's chairman and majority stockholder, repeatedly has said Tesoro was managed properly. He said Tesoro was a victim of the bad economy of the late 1980s and a "confluence" of factors including the regulation of rates savings and loans could charge customers.
Sanchez said he lost $3 million in the Tesoro collapse and pointed out that hundreds of similar institutions failed around that time.
Sanchez would not comment specifically Tuesday on the stacks of documents the Perry campaign distributed, but he said they were "stolen."
"They're stolen documents. Now we know that Rick Perry has not only corrupted the governor's office. We also know that he steals documents," Sanchez said.
He would not say where he believes the records were stolen from.
The Perry campaign says only that it got the documents from "a whistleblower who is not employed by a state agency."
Sanchez also said the documents do not reflect the truth. "They're deceptive, and he knows they're deceptive," Sanchez said during a campaign swing through South Texas.
Sanchez spokesman Mark Sanders said his campaign has other documents that would show there was no wrongdoing involving Tesoro, but that he can't release those documents because of attorney-client privilege. Sanders was unclear on whom the client is, but said it is not Sanchez.
"I'm telling you, the documents would show there was no wrongdoing. I can't release the documents," Sanders said.
A letter from the Federal Home Loan Bank of Dallas to Tesoro officials cited "numerous cases of noncompliance" with a consent agreement Tesoro entered into as it was failing. The violations included approving loans that lacked the required approval by regulators and that eventually wound up on Tesoro's long list of bad loans.
The Federal Home Loan Bank Board issued a statement when it took over Tesoro saying the thrift had a "large concentration of poorly underwritten, high-risk acquisition development and construction loans."
Tesoro also was under fire from a state supervisor. In August 1988, the state's supervisory agent, George W. Brown, notified his boss in Austin that a Tesoro official had violated the supervisory agreement.
In a letter to Cathryn Porter, then the director of supervision for the Texas Savings and Loan Department, Brown said Sanchez had used Tesoro assets to pay commissions "to a former officer without the knowledge or approval of the board of directors and then rehired the recipient."
"The above is one example of many that have surfaced," Brown told Porter about what he found at Tesoro, adding that he found examples of what appeared to be "collusion and kickbacks with some of the major borrowers."
Brown, now retired, said Sanchez seemed constantly irritated about having the government involved in his business.
"It was a pain for him. He didn't like it at all, and he made no bones about telling you he didn't like it," Brown told the American-Statesman.
Sanchez continues to control International Bank of Commerce, a successful financial empire based in Laredo. The bank along with his energy business are sources of much of the personal wealth Sanchez is spending on the governor's race.
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