One upon a time in 1980, Neil Bush married his sweetheart, Sharon, and they moved to Denver, Colorado, away from all the other members of the Bush family. “Neil got a $30,000 job negotiating mineral leases for Amoco. Denver was an oil-fueled boomtown, and soon the handsome son of the vice president was charming the swells at the soirees of Denver's social set,” according to the Dec 28, 2003 Washington Post.
In 1982, Neil and two of his co-workers quit Amoco and formed their own oil company, JNB Exploration. According to the October 29, 2000 St Petersburg Times, although Neil put up only a few hundred dollars, the other two partners made him president. They decided to put Neil in charge of raising money because “Neil knew people because of his name,” partner Evans Nash said.
Among the people that Neil hit up for cash were a couple of Denver real estate high rollers, Bill Walters and Ken Good. Walters was a flamboyant “mogul known as ‘the Donald Trump of Denver.’ Good owned the largest home in Colorado, a $10 million mansion with a special plumbing system that pumped Scotch, gin and vodka throughout the house,” according to the Post.
Initially Walters invested $150,000 and set up a $1.75 million line of credit for JNB at a bank he owned. Good invested $10,000 and pledged loans worth $1.5 million. Good also lent Neil $100,000 and said it didn't have to be paid back unless Neil made money.
As President of the company, Neil decided to pay himself a salary of $66,000 a year, more than twice what he made at Amoco. Over a period of five years, JNB drilled over 25 wells in four states, without finding a drop of oil. The company would have definitely gone under if not for the money that Good and Walters poured into it.
The good friend that he was, Bush soon positioned himself in a way that would allow him to repay his two buddies. In 1985 he accepted an invitation to sit on the board of directors at Silverado Savings & Loan, which by that time had already lent millions to Walters and Good. As a director, Neil voted to approve loans of over $100 million for his two partners.
Neil was on the board from 1985 to 1988, and during that time, Silverado lent Walters an additional $106 million and Good another $35 million, even as it became obvious that their real estate empires were crashing.
Good used some of the money to buy JNB, at a time when it too was losing money. But the sale came with great news for Neil. Good doubled his salary to $120,000 and gave him a $22,000 bonus. He also made Neil a director of one of his other companies which paid him a salary of $100,000 a year.
Life was grand for the Neil Bush family. The coffers were skyrocketing.
What The Hell Happened?
The failure of hundreds of Savings and Loans during the 1980s, as detailed in such sources as Stephen Pizzo's Inside Job, cost taxpayers an estimated $500 billion, according to the July 31, 1990 LA Times.
A US House committee concluded that over three-quarters of all S&L insolvencies appeared to be linked to serious misconduct by senior insiders or outsiders. In 1988, the comptroller of the currency found that less than 10 percent of recent bank failures had been caused solely by economic factors, according to Inside Job (p 305).
One thing is for sure, Neil Bush was one of those insiders. Good and Walters never repaid a dime of their loans, and in 1988 Silverado collapsed. The main reason cited for its demise was their failure to repay the $132 million.
And come to find out, the team’s moneymaking efforts were not limited to the US. According to the March 16, 2001 Austin Chronicle, Federal banking regulators later followed the trail of defaulted loans to Neil’s oil ventures, in particular JNB International, which was awarded drilling concessions in Argentina -- despite its complete lack of experience in international oil and gas drilling. It probably helped that the Bush family had cultivated close ties with the fabulously corrupt Carlos Menem, former president of Argentina, the Chronicle noted.
When JNB's rights and obligations were assumed by other investors, Neil tried to get another company, Plains Resources, to invest in Argentina. Plains wasn't buying. But it was hiring, and picked up Neil as a consultant for its Argentine market -- because, as Plains executive Carlos Garibaldi told The New York Times' Jeff Gerth in 1992, Neil had “traveled [in Argentina] and played tennis with President Menem,” the Chronicle reported.
Learning to play tennis is definitely going to be added to my things to-do list.
For God’s Sake, Quit Whining!
When regulators determined that Neil's deals with Good and Walters constituted “multiple conflicts of interest,” Neil answered the charge by telling reporters that “self-serving regulators” were persecuting him because he was the President's son.
Nobody bought his “poor me” line and in fact, it didn’t take long for Neil to become the Poster Boy for the entire S&L scandal once “Jail Neil Bush” signs started popping up in Washington and Denver.
To this day, Neil claims he did nothing wrong. “I happened to be one of hundreds of other American businessmen and women who served as an outside director on the board of a savings and loan institution that failed during the 1980s,” he wrote in an e-mail. “I regret that the institution's failure cost taxpayers so much money,” according to the December 28, 2003 Washington Post. Well I’ve got news for him, as a taxpayer so do I regret it.
According to Stephen Pizzo in Mother Jones on September 1, 1992, “After almost two years of hand-wringing had passed, an expert hired by regulators declared that Neil suffered from an “ethical disability, and he was required to pay a $50,000 fine for his ethical lapses at Silverado.” The deal was so good that Neil decided to drop his appeal of the case. As usual, “family friends” raised money to pay the $50,000 fine.
While five other Silverado directors were barred from working for any federally insured institution for life, Neil was only ordered to “desist from any acts, omissions or practices involving any conflicts of interest, unsafe or unsound practices or breaches of fiduciary duty.” In other words, quit being a crook. Big deal.
Neil suffered absolutely no consequences. Thomas “Lud” Ashley “came to the rescue,” Barbara Bush said in her book, and raised money for his legal bills. And Lud sure did. An estimated $250,000 was reportedly paid by the banking-industry lobbyist who was fighting to get banks deregulated, according to Pizzo in Mother Jones. So whether or not it was out of friendship is debatable.
In the end, the fiasco cost taxpayers $1.3 billion all total. But Neil’s now ex-wife Sharon claims it cost the family as well. “I remember having one chair in the whole living room,” said Sharon. “It was a tough time. We had to move and sell the house,” according to the October 10, 2004 ABC News.
It sounds to me like she should have bought more furniture with our money.
About That $100,000 Loan
Neil ultimately admitted that his seat on the board at Silverado had nothing to do with his expertise. He told Time magazine, “[I]f I were to sit here and deny that the Bush name didn't have something to do with it,” while trying to explain why, at the young age of 30, he was invited to sit on the board of a federally insured institution, at a time when the average age of a director was 57 and only about 1% were under 35. I think the purpose of the invite is more than obvious and requires no further explanation.
In what I’m sure was an oversight, it seems that Neil forgot to list his business relationship with Good on his Silverado conflict-of-interest form when he accepted the $100,000. But then, $100,000 probably didn’t seem like a significant amount of cash, considering that by the time he filled out the form, he had already helped approve over $100 million worth of loans for Good.
Another thing Neil apparently forgot to mention was that by the time the form was filled out, he was completely dependent on Good and Walters as his main source of income. “I know it sounds a little fishy,” he said when he testified before members of Congress and told them that the $100,000 did not have to be repaid. What it was, “was an incredibly sweet deal,” he said. In 1990, Neil finally got around to reporting the $100,000 as income on his tax return, 6 years late.
A sideline to this tale that is rarely mentioned is that Neil’s dad directly benefited from the Silverado looting right along with his son. Good gave the old man $100,000 too, for his 1988 campaign at a time when Bush was not only the VP, but chairman of the Reagan’s Task Force on Regulation of Financial Services as well. This cozy little set up renders a whole new meaning to the line about the “fox in the henhouse.”
Apparently $100,000 was the going rate for Bush bribes in the 80s.
How Did Neil Stay Out Of Jail?
Another interesting aside to the story is how the public closure of Silverado was delayed until after the 1988 election. Shortly before the event, when regulators wanted to close the doors, a call from Washington delayed the closing for 45 days which meant the public would not learn about its newly acquired $1.3 billion debt until after Bush won.
So the question remains, how did Neil manage to stay out of jail after regulators determined that his conduct “involved significant conflicts of interest and constituted multiple breaches” of his fiduciary duties? The answer to that question involves a story within a story, and one cover-up covered-up by a second.
To be able to follow this scheme, partial knowledge of the cast and characters is necessary. The Federal regulatory agencies in place during the S&L debacle were the Federal Home Loan Bank Board (FHLBB) and its successor agencies, the Resolution Trust Corporation (RTC) and the Office of Thrift Supervision (OTS).
Of course those agencies were stacked with Bush political appointees. For instance, Secretary of the Treasury Nicholas Brady was a longtime Bush friend. The guy picked to head the OTS was Timothy Ryan, who served in the 1988 Bush campaign, and whose appointment got approved despite intense Congressional opposition.
The cast of characters includes Neil, Good and Walters and others involved were, Michael Wise, Chairman and CEO of Silverado; Kermit Mowbray, President of the Topeka Kansas Federal Home Loan Bank (directed by the FHLBB in Washington); Dorothy van Cleave, S&L Examiner; and Terry Sandefur, S&L Analyst.
Although the media, for whatever reasons, let the public believe that President Bush had remained neutral while his son's shady dealings were bubbling under the radar screen, the old man’s fingerprints were all over the mess was from start to finish.
At the time, Steven Wilmsen, the Denver Post financial reporter, did write several key stories about the scandal for the Post and the Denver Business Journal, and he later wrote the book, Silverado, Neil Bush and the Savings and Loan Scandal.
Wilmsen says Silverado was engaged in fraud as early as 1984, and that Kansas Federal Home Loan Bank “actually approved most of Silverado's illegal and wildly imprudent transactions” from 1984 to 1988. The man responsible for “those approvals was Kermit Mowbray, president of the Topeka bank,” Wilmsen says. (p 150)
Regulators actually discovered the illegalities in late 1986, when Dorothy van Cleave and Terry Sandefur were assigned to look at Silverado’s books. That’s when the whole scheme began to unravel. The two regulators soon realized that Silverado had been on the edge for years and wondered why it hadn't been caught before then.
Based upon the documents they had examined, van Cleave and Sandefur began a full-scale investigation with two examiners allotted for the task. They later deemed the situation so critical that they could not wait for the examination to be completed, and decided to issue a cease and desist order that would have put Silverado under tight government control.
Then something very strange happened. After a meeting with Silverado's management, and a phone call to Topeka, van Cleave and Sandefur were told that Mowbray said to drop the order.
And more strange things kept on happening. In August 1988 the Colorado savings and loan commissioner issued a capital call, which is the first step in a government takeover. When that happened, Neil resigned immediately, saying that he did not want regulators to be constrained by his presence on the board.
Neil being considerate about not trying to wield influence through his position of power with a father in the WH? What a joke! It was a little late in the game for that phony act. “The truth of the matter,” Wilmsen writes, “was that Neil already was under investigation by the regulators.” (p 182) On January 27, 1987, van Cleave had asked investigators in Washington to look into insider trading at Silverado. That’s when regulators began discovering all the conflicts of interest between Neil, Walters, and Good.
As it turns out, having Neil on the board had allowed Silverado to get away with murder for years. According to testimony by the top gun of the banking regulators in June 1990, his presence on the board was “a material part of the unconscionable delays in taking over Silverado” as far back as 1986. Neil should have known that the scam couldn’t go on forever. I mean its not like they didn’t know they were being watched.
Greed must be a more powerful emotion than fear.
By the fall of 1988, Neil, and his dad, knew they were in deep trouble. Wilmsen believes the Bush campaign would have been seriously damaged if the American people had found out that his son “was in the thick of the greatest financial scandal in the nation's history.” He details “some troubling coincidences in the events that unfolded in the months between Neil's resignation and Silverado's closing” on December 9, 1988. (p. 182)
For instance, on October 21, 1988, the Colorado S&L commissioner called Mowbray and told him of the plan to close Silverado before the end of October. Mowbray ordered a halt to the proceedings saying a call had come from Washington telling him to hold off closing Silverado for 45 days. No one seemed to know why. Mowbray later told the House Banking Committee that he could not remember who called him or the reasons given by the caller for requesting the 45 day delay. (p. 183)
Oh well, that’s understandable in the last days of a presidential campaign with all the excitement. I guess we shouldn’t have expected the poor guy to remember every little conversation he had with people in Washington. But perhaps members of the committee should have at least tried to help jog his memory with phone records from the oval office.
Where was Ken Starr when we needed him?
That 45 days extension cost taxpayers a bundle. According to Wilmsen, the “cost of that delay is in the hundreds of millions of dollars. In late September, regulators estimated the cost of Silverado's closure to be between $400 million and $600 million. When the thrift was finally closed December 9, it cost $1 billion.” (p 184)
Cover-Up of the Cover-Up
In 1990, the Bush Treasury Department declared it was mounting a thorough investigation of the entire S&L matter. Here’s what the President told the country about his plans to deal with the S&L scoundrels on June 22, 1990: “We will not rest until the cheats and the chiselers and the charlatans spend a large chunk of their lives behind the bars of a federal prison,” he said. I guess he meant every cheat, chiseler and charlatan except for his son.
The truth is that by using the power of the White House, Bush was able to find ways to sabotage both the investigations and the prosecutions of wrongdoers in order to keep Neil out of prison. When FBI field offices said they needed 400 more agents to help with the 21,000 uninvestigated S&L fraud referrals in their files, Bush only approved half the number of agents requested and he actually reduced the amount of money Congress had authorized to spend on criminal prosecutions.
Not long after Clinton took office, it became obvious that high-ranking people in the Bush regulatory agencies had engaged in activities that definitely warranted investigation. However, because of the Republican smoke screen thrown up with Whitewater, Clinton’s hands were tied. Any attempt to investigate the RTC and OTC would have been touted as an attempt to interfere with the Whitewater investigation.
At one point, the Treasury Department did ask the FBI for an investigation into the Bush White House pressure put on federal regulators to delay the closing of Silverado until after the election. But it went nowhere once it was presented to Bush's good friend, Attorney General Dick Thornburgh.
In the end, Bush was able to block every attempt to hold Neil responsible for his action.
Neil (but not his wife) lived happily ever after (free from prison), and the moral of the story is, contrary to what many people believe, crime does pay. At least for corporate crooks named Bush.
Evelyn J. Pringle is an Ohio-based investigative journalist, and a columnist for Independent Media TV. She can be reached at: firstname.lastname@example.org. (C) Copyright 2004 Evelyn J. Pringle.
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