Jury’s Out on Likely Head of Banking Panel : Some Ask How Colorful Lawmaker Will Fare on Tough Decisions

WASHINGTON —  When the late Wright Patman was chairman of the House Banking, Finance and Urban Affairs Committee from 1963 to 1974, he was known as the “last of the red-hot populists” for his relentless but quixotic crusades against the Federal Reserve Board and high interest rates.

Now, Rep. Henry B. Gonzalez, another populist Texas Democrat with a reputation as a congressional eccentric, is in line to take over the committee at a time of crisis in the banking and thrift industries.

Two months before Congress returns, lawmakers and representatives of the financial community are already pondering how the colorful, 72-year-old veteran lawmaker will fare in guiding the crucial committee in one of its most difficult challenges.

The banking committee is expected to help fashion legislation to bail out the scores of bankrupt savings and loan associations whose losses have pushed the industry an estimated $50 billion into the red. While industry premiums will cover some of the losses, many members of Congress have concluded reluctantly that substantial financial aid from taxpayer funds will be necessary to keep the debacle from worsening.

No Democratic Challenge

As chairman, Gonzalez will have the difficult job of reconciling differing plans in the midst of a severe budget squeeze and reconciling a multitude of powerful, conflicting interests.

Critics in Congress, however, view Gonzalez, a House member since 1961, more as an iconoclastic speechmaker than as a master at achieving legislative compromises. Nevertheless, there appears to be no chance that another Democrat on the committee will challenge the senior Democrat’s succession as chairman after the unexpected defeat of committee head Fernand J. St Germain (D-R.I.) in the November election.

“The alternative to Henry Gonzalez would be a huge bloodletting, which nobody wants,” said one Democratic Party insider who asked not to be quoted by name.

“The leadership is strongly supporting him,” said California Rep. Tony Coelho (D-Merced), the Democratic whip. “There are always people who are uneasy about a new chairman, but Mr. Gonzalez deserves a chance to prove that he can be a good chairman.”

In one possible bid to blunt objections to his new role, Gonzalez has passed the word to other committee Democrats that he wants to remain as chairman of the panel’s housing subcommittee rather than take over the more powerful subcommittee on financial institutions, supervision and insurance that St Germain headed.

This would leave the way open for Rep. Frank Annunzio, 73, a more conventional lawmaker from the Chicago Democratic Party organization, to preside over the subcommittee that will shape anticipated legislation dealing with the savings industry bailout.

Record Gives Pause

A spokesman for the American Banking Assn. tentatively welcomed Gonzalez’s rise to the chairmanship, saying: “We basically felt that St Germain was no friend of banking. In his absence, perhaps the picture is a little bit brighter. We’re anxious to work with Mr. Gonzalez.”

But Gonzalez’s record, which includes an assortment of hourlong speeches made under so-called special orders with the pro forma approval of the House Speaker--would give pause to any banker. For example, last Oct. 21 Gonzalez declared:

“The truth of the matter is that mostly because of the instability of interest rates, mostly because our country has been flagellated by extortionist and usurious rates of interest, we have the concomitance and the end result of a real crisis that is going to task the ability and the sense of responsibility and the devotion to duty of every American.”

It is the Federal Reserve Board, he has maintained, just as Patman often did, that is chiefly responsible for this state of affairs through its management of the money supply.

But Gonzalez also believes that new, unseen economic forces are affecting the American way of life, as he said in an Oct. 14 speech:

“No matter what we do with our budget here, there are forces over which we no longer have control and that are going to make the decisions for us. “

Seen as a Fighter

One of his proposed solutions would impose a 100% tax on gains from the sale of stock futures or stock options that are held for less than a year--a Draconian approach designed to reduce rapid turnover in securities.

“Are we having this high, volatile, explosively, potentially speculative fever in these high altars and sanctums of finance uncontrolled, running amok, (in) heedless disregard to the public interest?” he asked in a July 28 House speech. “Then we had better look at it.”

Rep. Albert Bustamente (D-Tex.), who represents a neighboring district, predicted that Gonzalez would be a hard-working, dogged battler in the chairman’s job.

“He’ll be like the old banking Chairman Wright Patman--sort of a populist--and maybe that’s what’s needed with the banking industry in the condition that it’s in these days,” Bustamente said in a telephone interview.

Nevertheless, others wonder about his eccentricity.

His off-the-cuff, meandering speeches, permitted by House procedure after the regular legislative business is concluded, are his indelible trademark.

For sheer Gonzalez-isms, this passage from a Sept. 23 speech is hard to beat:

“It seems as if with no real preconceived thinking of an organized fashion or manner, we have walked into history quite unprepared for the events that are now crashing around our ears in an electronic fast age in rapid succession, and the same disturbing fact, as evidenced by our failure up to now to comprehend the world closer to us on our front porch, so to speak, and I will not call it the back porch but the front porch, which is a new world.”