House Banking Committee

The House committee that became the Committee on Banking, Finance and Urban Affairs, and since 2001 the Financial Services Committee, was created in 1865 as the Committee on Banking and Currency. Henry B. Gonzalez of San Antonio chaired it in the 101st to 103rd Congresses and Jim Leach of Iowa in the 104th to 106th.¹

Gonzalez and BNL

Gonzalez became chairman in January 1989, and his hearings on Charles Keating and Lincoln Savings and Loan produced the evidence against the five senators who had intervened with regulators for Keating.² After the FBI raided the Atlanta branch of the Banca Nazionale del Lavoro in August 1989 and found billions of dollars in off-book loans to Iraq, Gonzalez proposed hearings; the attorney general's legislative aide, Lee Rawls, advised Richard Thornburgh in 1990 that "our best attempt to thwart any further congressional inquiry by the House Banking Committee into this case is to have you contact Chairman Gonzalez directly." Gonzalez declined the call, and Thornburgh wrote to him on September 26, 1990, that a hearing and staff interviews raised "the prospect that culpable parties will elude prosecution."³⁴ The committee issued subpoenas, and from February 1992 Gonzalez read classified documents into the Congressional Record in some twenty special order speeches.⁴

The committee took testimony from SerVaas Inc. on April 9, 1991, that the brass factory it sold to Iraq was for commercial products; on September 25, 1992, Gonzalez produced a memorandum of July 31, 1988, showing the Iraqi buyer meant it for cartridge cases and artillery fuses.⁵ On April 28, 1992, he told the House that "BNL was a client of Mr. Scowcroft's while he was the vice-chairman of Kissinger Associates."⁶ Lawrence Eagleburger told the committee that year: "Quite frankly, the selective disclosure, out of context, of classified documents has led, knowingly or otherwise, to distortions of the record, half-truths, and outright falsehoods."³ Director Robert Gates ordered a damage assessment of one of Gonzalez's disclosures, and on August 4, 1992, the minority leader, Bob Michel, introduced a resolution calling for an ethics investigation; Gonzalez was not censured.⁷ He called the report of the special counsel Frederick Lacey, who in December 1992 found no grounds for an independent counsel, a whitewash.⁹ On November 9, 1993, Christopher Drogoul, the former manager of the Atlanta branch, testified under oath before the committee with five other former employees.⁹

Leach and Systematics

At Leach's written request, officers of the CIA's inspector general and the inspector general of the National Security Agency briefed him in the Rayburn Building on July 21, 1995, on published allegations about Systematics, the Arkansas bank-software company of Jackson Stephens, PROMIS and Mena. The CIA's memorandum of the meeting records Leach as saying that "most of the allegations contained within the articles were probably false," but that "as information goes out to the American public in non-traditional ways, it becomes more believable." The agency told him it had "not found any records related to Systematics of Arkansas." Director John Deutch ordered an inspector general's investigation on March 13, 1996, and Leach was still sending questions in 1998.⁸