Date: 1987-10-27
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. Robert Axley is resigning this week as general counsel of the Federal Asset Disposition Association. This is the latest in changes at FADA in recent weeks in wake of a continuing investigation by theHouse Banking Committee. No official reason is being given for the departure of Mr. Axley. who served not only as general counsel but also as the right hand man to Ms. Roslyn Payne. the recently deposed CEO of* FADA. But. in reviewing Mr. Axleys role in FADAa sizable one since the agency was launched 18 months agoI believeMr. Aleys departure is long overdue. For one thing. Mr. Axley failed to file a financial disclosure form with FADA until January 26. 1987. nearly 10 monthsafter he joined the FADA staff -on April 1. 1986. When he joined FADAs. staff. Mr. Axley failed to note his involvement with a piece of Texas real estate which had been paid for with a loan from an Arkansas S&L. The S&L. First South Savings and Loan. wasater closed by the FSLIC on December 4. 1985with FADA assigned to manage a substantial portion of the S&Ls assets. Prior to the assignment of the assets. FSLICs Office of General Counsel. brought to FADAs attention that Mr. Axley had an interest in several loans made by First South. The loans related to a 2.200 acre tract of undeveloped property in Piano. TX. referred to as Preston Meadows. Because of the appearance of a conflict. FSLIC staff recommended that the Preston Meadow project not be transferred to FADAs control. but rather be assigned to the First South receivership. What is important here is that prior to the decision to close First South and assign a substantial portion of its assets to FADA. Mr. Axley had -neither informed the FSLIC of his dealings with First South or filed a financial disclosure statement. The first written notice of this relationship was on December 3. 1986. when Mr. Axley wrote a memo to Roslyn Payne entitled "Savings and Loan System Involvement." In that memo. Mr. Axley describes his prior Involvement in Realty Development Corp. [RDC] from December 1979 to February 1984. The major partner in RDC was Richard Strauss. While the full range of RDCs business transactions are not known to the committee. Mr. Axleys statement of December 3. 1986. is noteworthy: With respect to my involvement with RDC 0 * * I resigned from RDC and Its affiliated corporations for several reasons. among them my uneasiness with the way the institutions involved conducted business * Subsequent to my resignation from RDC * 0 because of my concern with the manner of operation of RDC and any potential liability I might have as an owner of assets in partnership with RDC. I conveyed my interest * * into limited partnerships in an attempt to limit liability0 * *. Mr. Axley showed good business judgment by limiting his personal liability In this situation. I say this because committee staff have informed me that three of the S & Ls which RDC used to finance its adventures are now insolvent. Four RDC projects of which committee staff have knowledge have all resulted in significant losses for the S & Ls which provided financing. While Mr. Axley was able to limit his personal liability. the federally insured savings and loans with which RDC did business were not able to escape the crush of their unfortunate dealings with RDC. I understand that Mr. Axleys interest in Preston Meadows is in a limited partnership. and that his interest in the project is currently less than his original interest. In his statement to Ms. Payne. he says that he conveyed his interest in Preston Meadows and another property into a blind trust on November 20. 1986. Again. this is over 7 months after joining FADA and after planning for First Southsclosing had been underway. In addition. the blind trust is in trustee with Aiken. Gump. & Strauss. a Texas law firm with one of the principals being Robert Strauss. This is the same Robert Strauss whose son. Richard. went into the Texas land deal with Mr. Axley. Aiken. Gump has provided FADA assistance as well. We know that this firm was retained by FADA to prepare for litigation by a vocal critic. This effort went astray when detectives began harassing the critic. Committee staff have also been told that Aiken. Gump -attorneys counseled FADA officials. including board chairman William McKenna. on how best to deal with the Banking Committees in: quiry. Mr. Speaker. FADAs mission is to help the FSLIC recover the maximum from assets picked up from troubled and failed savings and loans. It is essential that this mission be carded out efficiently and in a manner that merits the publics confidence. It is important that there not be conflicts of interest or the appearance of conflicts between FADAs public role and the private relationships of its officers and employees. FADA must start now with a top to bottom review of its personnel files. financial disclosure forms and related data to make certain that conflicts and appearances of conflicts of interest do not exist. Where they do. steps must be taken to eliminate the problem. I have today written the Chairman of the Federal Home Loan Bank Board. Danny Wall. asking that he pursue -this issue vigorously with FADA. During the committees hearing on October 15. Chairman Wall promised that the problems it FADA would be cleaned up. It Is my intention that -this committee continue its oversight and make certain there are fundamental changes that truly represent a clean up at all levels of FADAs operations. If this cannotbe accomplished. then clearly outright abolishment of the agency must be considered.