New Chair for House Banking Committee : Delays Expected in Action on S&L; Crisis

WASHINGTON — The expected selection of Rep. Henry B. Gonzalez (D-Texas) as chairman of the House Banking, Finance and Urban Affairs Committee may further fragment an already divided panel and delay a solution to the savings and loan crisis, analysts say.

Gonzalez, a hot-tempered, outspoken maverick, is considered the most likely successor to Rep. Fernand J. St Germain (D-R.I.), who was defeated last week in his bid for a 15th term.

Although a handful of younger committee members have expressed an interest in the position, the 72-year-old Gonzalez is backed by House Speaker Jim Wright (D-Texas) and other Democratic leaders, including Rep. Mary Rose Oakar of Ohio, a potential rival.

That all but assures his selection as chairman when the House Democratic Caucus meets Dec. 6.

Gonzalez will be taking over at the start of a critical year for the committee. Regulators estimate as much as $50 billion is needed to clean up the S&L; mess and analysts agree nearly uniformly that it will require government help.

The committee is also expected to take another try at a fundamental restructuring of the financial system, allowing greater mingling of commercial banks and securities firms. Third World debt is likely to get attention, too.

Both the S&L; crisis and new bank powers have been divisive issues and Congress couldn’t agree on legislation this year. Sen. Donald W. Riegle (D-Mich.) is expected to succeed the retiring William Proxmire (D-Wis.) as chairman of the Senate Banking, Housing and Urban Affairs Committee, meaning both chambers of Congress will have new banking leaders in 1989.

“It’s hard not to believe this is going to slow momentum,” said R. Dan Brumbaugh, a savings industry consultant and former chief economist of the Federal Home Loan Bank Board.

The changeover in Congress means the new Bush Administration likely will take the lead in forging a solution to the S&L; problem, he said. “However, nothing of a significant magnitude can get done without the concurrence of the House committee,” he said.

Gonzalez has generally opposed allowing banks to get involved with securities underwriting, but he said recently that he also takes a pragmatic view and recognizes that the financial system is changing and Congress must change with the times.

Last summer, Gonzalez said he favored an immediate $50-billion loan from the Treasury to quickly resolve the S&L; crisis. He has also expressed sympathy for S&Ls; in his home state, where most of the industry’s losses are concentrated, arguing that they were victimized by the drop in oil prices and the decline in Southwestern real estate prices.

“He has strong feelings about the industry’s inability to pay, and that’s encouraging,” said Frederick Webber, the newly appointed president of the savings industry’s largest trade group, the U.S. League of Savings Institutions.

Webber said the industry will not be sorry to see the departure of St Germain, who was defeated after disclosure of Justice Department allegations that he accepted thousands of dollars in entertainment and meals from S&L; lobbyists.

“I know the allegations have been that the industry was in bed with Freddy, but look at his record. The chairman did not go out of his way to help the industry, not by a long shot,” Webber said.

Gonzalez gets high marks from colleagues for personal integrity and his willingness to speak his mind. They also say he is a likeable man, despite a temper that caused him two years ago to slug a man who called him a communist.

However, many question Gonzalez’s ability to rein in his own views enough to ride herd on a committee with more than 50 members and nearly as many factions.

“He is not a dumb man. He’s bright. He understands problems and he can be very direct with what he says. But it’s one thing to be able to make cogent comments and its another thing to be able to forge a legislative compromise. That may be where he has problems,” said Bert Ely, a financial institutions consultant in Alexandria, Va.