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Prosecutor Announces Probe into Congressional Overdrafts

By William J. Eaton
and Ronald Ostrow

Los Angeles Times


The growing House bank scandal escalated again yesterday, when a U.S. Attorney announced he had begun a preliminary investigation into the check-cashing practices of members of the House of Representatives and the White House acknowledged it was trying to determine whether any of its high-ranking former lawmakers were involved.

While no taxpayers' money was lost because of the now-defunct bank's practice of regularly covering overdrafts, federal laws prohibit knowingly writing a check without enough funds on deposit to pay for it, authorities said.

Federal investigators also will seek to determine whether federal laws against fraud, improper campaign spending or failure to declare interest-free loans on federal income tax returns may have been violated by members of Congress who held accounts at the bank.

In a related development, White House spokesman Marlin Fitzwater said the president's counsel, C. Boyden Gray, was "making a check" to determine whether any former GOP lawmakers who joined Bush's team had cashed bad checks, including Vice President Dan Quayle and the president himself. Fitzwater said, however, that Bush did not overdraw his account when he was a House member from 1969 to 1971.

"It's just common sense that we ought to know," Fitzwater told reporters.

Five Cabinet members were in the House during part of the period in question -- Secretary of Housing Jack Kemp, Secretary of Interior Manuel Lujan, Secretary of Labor Lynn Martin, Secretary of Agriculture Ed Madigan and Secretary of Defense Dick Cheney. Lujan and Kemp denied writing any bad checks, while the others said they were checking their records before making a formal statement on the matter.

Earlier in the day, Fitzwater acknowledged that one Cabinet member was under investigation in connection with the bank, but refused to release that person's identity.

The announcement of the investigation by U.S. Attorney Jay Stephens marked a new turn in the fast-breaking scandal that has rocked Congress and triggered estimates by political experts that as many as two dozen incumbents may be defeated in November.

A spokesman for the U.S. Attorney said the investigation began last fall when the General Accounting Office issued a sharply critical report on the bank's willingness to tolerate thousands of overdrafts without penalty.

Since then, the House ordered the bank closed and the House ethics committee issued a report citing 19 current and five former members as the worst abusers of the casual banking system during a recent 39-month period.

The House also decided in a 426-0 vote early Friday morning to list the names of all 355 current and former House members who wrote one or more bad checks during the period under scrutiny.

While Republicans on Capitol Hill attempted to fix the blame for the bank mess on the Democrats who control Congress, President Bush withheld judgment, saying each case would have to be analyzed separately.

"People are outraged by it," Bush told reporters. "I'm waiting and watching it unfold. It's an institutional thing. ... I'm not jumping on any individual and I think everyone has his or her own case to make to their constituents, to the people."

The names of 23 out of 24 of the House members found to be the worst abusers of the bank's lenient overdraft policy became known Saturday night. They include 16 current Democratic members of the House and two Republicans. Names of 331 other current and former members are to be announced Apr. 2.

In a preliminary political damage assessment, outside specialists and party officials said the furor over the bank would be a factor in some, but not all, of the districts where the incumbent authored a sizable number of bad checks.

Judging by the makeup of the list of 24, Democrats were expected to suffer more than Republicans if voters are as angry in November as they appear to be in March.

"This will increase turnover by a couple dozen," predicted Thomas Mann, a congressional scholar at the Brookings Institution. "There are people with clear interests in keeping it alive, including challengers, Republican strategists, term-limit advocates and radio talk-show hosts."

Spencer Abraham, head of the Republican Congressional Campaign Committee, said the Democrats' control of the House would make Democratic candidates more vulnerable to GOP challengers, especially if they have leadership roles.

"The guys who are going to take the biggest hit there are the people running the store," Abraham said.