Ethics panel rejects request by Gonzalez for probe of Leach.

WASHINGTON -- Reacting with unusual speed, the House Ethics Committee rejected a request from Rep. Henry B. Gonzalez to investigate the House Banking Committee's ranking Republican, Rep. Jim Leach of Iowa.

In addition, Rep. Leach said in an interview Thursday that House Speaker Thomas S. Foley had called that morning to offer his support.

Rep. Gonzalez, chairman of the banking committee, had criticized Rep. Leach in a letter to the ethics panel for helping raise funds for a chair endowed in his name at Wartburg College, Waverly, Iowa. Rep. Gonzalez called the case "especially egregious" because funds were solicited from the banking industry.

The case, he said, "calls into question the integrity of the House."

However, Rep. Leach said he agreed to lend his name to the establishment of a chair in banking and monetary economics only if he was not involved in fund-raising.

"One thing the Speaker pointed out is that he knew of no fund-raising effort that had been handled in as circumspect a manner," Rep. Leach said.

In their letter, the chairman and ranking Republican on the House Ethics Committee told Rep. Gonzalez that Rep. Leach's activities "do not indicate a violationon any law, rule, or regulation within the purview of the committee."

Members of COngress, they said, "are free to permit the use of their names by academic institutions or charitable organizations that are seeking financial contributions - from whatever the source."

The only exceptions, they said, would be if the solicitation made it appear that the House of Representatives endorsed the project or if contributions were made in an effort to influence legislation.

The letter noted that Rep. Leach did not himself engage in any official fund-raising, but said it wouldn't have mattered if he had as long as he did not use House resources or receive any direct personal benefit.

The letter was signed by Rep. Jim McDermott, D-Wash., chairman of the ethics panel, and Rep. Fred Grandy, R-Iowa, its ranking Republican.

The Gonzalez letter was the latest in a series of increasingly personal attacks that began as the Iowa Republican began seeking hearings into President Clinton's involvement with a failed Arkansas thrift and development company.

Rep. Gonzalez has generally opposed the idea of holding hearings, though he recently urged the House leadership to conduct an inquiry as a means of stilling Republican criticism.

Rep. Leach said Thursday that he "is trying to remain bemused" about the situation, and said he "continues to respect the chairman."

He also said the letter would not affect any of his legislative activities. As ranking Republican, Rep. Leach often works closely with Rep. Gonzalez on legislation. For example, the two are co-sponsors of a bill that tightens the oversight of bank derivatives activity.

In his letter to the ethics committee, which was dated June 21, Rep. Gonzalez appeared to allude to the Whitewater situation, noting that the Wartburg College incident came to light "at a time when so many others' ethics are being called into question as well."

The Texas Democrat also noted that Federal Reserve Board Chairman Alan Greenspan appeared at an event at the college.

"When a memher's name and interest are linked to an endeavor, and lobbyists and others who have interest in legislation falling under one's jurisdiction are allowed - encouraged even- to contribute to maintaining that interest, there is at least an appearance of impropriety," he added.

A spokesman for the banking committee declined on Thursday to make additional comment.

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