Former Regulator Disputes Claims Of Earlier Testifiers in S&L Probe

FITTINGLY, the New Year has begun with testimony from a new direction in the Senate probe of the so-called Keating affair: in support of the five accused senators, rather than in criticism of them. In 1990 the six members of the Senate Ethics Committee heard several federal thrift regulators charge that they felt pressure from five senators to end a lengthy government examination of the financial soundness of the Lincoln Savings and Loan Association, owned by Charles Keating. Defense lawyers then tried to poke holes in their testimony.

In the first 1991 session committee members this week heard contrary testimony from a former government regulator. Rosemary Stewart, a former top savings-and-loan regulator, said flatly that there was ``no truth'' to charges that political influence had delayed the government's former regulatory agency, the Federal Home Loan Bank Board, from putting Keating's S&L into receivership. She was called as a witness by Sen. Alan Cranston (D) of California, one of the five whose actions are in question.

The former director of enforcement at the bank board's successor, the Office of Thrift Supervision, Ms. Stewart is the first of several witnesses whom defense lawyers intend to call in the next few days on behalf of their clients. Cross-examination of these witnesses rests with the committee's special counsel, Robert Bennett.

Key defense witnesses will be the five senators themselves, who will be given an opportunity to present their cases in detail and to try to knock down the accusations of previous witnesses.

The committee is trying to find out whether the five improperly acted on Keating's behalf in return for his contributions to their campaigns and causes. All five deny any wrongdoing.

In addition to Senator Cranston they are: Dennis DeConcini (D) of Arizona, John Glenn (D) of Ohio, John McCain (R) of Arizona, and Donald Riegle (D) of Michigan.

No one knows how the six committee members will assess the differing testimony on the presence or absence of political pressure, as they seek to arrive at a majority opinion about the propriety of the actions of their five colleagues.

THE Keating case is but one of several potentially divisive issues Congress will be taking up shortly. At the top of the list is the situation in the Gulf: Will there be peace or war? Should President Bush get congressional consent in advance of any offensive military action? Early debate already is under way; should it become full-scale, the outlook is for deep divisions in both Senate and House, and within both parties.

The second deeply divisive issue the full Congress will have to deal with late this year is the United States economy and the federal budget deficit. At present, however, it seems barely noticed in a Washington largely wrapped up in the Gulf issue.

Compared with these two issues, the Keating case - while encompassing to the five accused senators - commands less attention in official Washington.

Like some but not all witnesses Ms. Stewart was the picture of confidence and authoritativeness as Cranston's attorney, William Taylor III, led her through her testimony. Her answers to Mr. Taylor's questions were well-organized, to the point and brief.

She said she was aware of a call made by a Cranston aide expressing displeasure with the board's treatment of Lincoln. But she said such calls from Capitol Hill were ``not uncommon at all.''

Some of her comments supported the decisions of Edwin Gray, former top thrift regulator; some experts on the savings-and-loan scandal have sharply criticized him for not having put Keating's bank into receivership when his San Francisco regulators recommended it in 1987.

Mr. Gray could not have done that, Stewart indicated without mentioning him by name, because the San Francisco regulators did not give him a strong enough case. For one thing, she said, ``the recommendations from San Francisco did not document dissipation of assets'' by Lincoln.

Further, she charged, the San Francisco regulators previously had taken ``only minimal supervisory action'' to pressure Lincoln ``to get their high-risk activities under control.''

The word picture she drew is a stark contrast from the one that San Francisco regulators painted in earlier appearances before the same committee. They said they felt pressured by the appearance of the five senators in a Washington meeting, and indicated that they had provided ample evidence to their Washington regulatory bosses of the need to put Lincoln into receivership.