The savings and loan scandal that may cost American taxpayers $500-billion is bad enough. The first political-tainted efforts to deal with it may have been worse. Two years ago the federal government sold 15 insolvent Texas savings and loan associations to a Phoenix businessman and Republican contributor, James M. Fail. He consolidated them into Bluebonnet Savings of Dallas. Fail was well known to federal officials. In 1976 a company he controlled was found guilty of fraud in Alabama. Fail himself was charged with securities fraud, but the charges were dropped when he agreed not to conduct any new business in Alabama.
Fail borrowed $70-million to buy the S&Ls. He put up only $1,000 of his own money. The federal government promised him $1.85-billion in subsidies _ $23-million a month.
The person who made this deal on behalf of the taxpayers was M. Danny Wall, the chairman of the Federal Home Loan Bank Board.
A behind-the-scenes lobbyist who pushed hard for Fail was Robert J. Thompson, President Bush's congressional liaison man when he was vice president and a Reagan White House staffer. Fail lent Thompson more than $500,000 in 1989.
It was not at all surprising that Fail, Wall and Thompson refused to appear voluntarily Monday before a Senate Judiciary subcommittee. The committee should issue subpoenas immediately. American taxpayers deserve to know how this sweetheart deal subsidized with their money came about, exactly who was responsible for it and whether any laws were violated.
The more the public learns about this S&L scandal the worse the stench of it becomes.