Ethics Panel Clears Clarke After Review Of Finances
WASHINGTON -- Government ethics officials cleared Comptroller of the Currency Robert L. Clarke on Tuesday of allegations that he improperly handled his personal finances, but he still faces obstacles in his quest for a second term.
In a 19-page report, a panel of ethics investigators from several agencies found that Mr. Clarke's "financial investments did not give rise to any conflicts of interest," as was suggested in an April 30 article in The Washington Post.
Senate Urged to Act
The Treasury Department, which initiated and participated in the ethics inquiry, issued an immediate call to the Senate to "act expeditiously and hold a confirmation hearing" for Mr. Clarke, whom President Bush nominated for a second five- year term last January. The confirmation process remains bottled up in the Senate Banking Committee.
Committee Chairman Donald W. Riegle Jr., D-Mich., has refused to schedule a confirmation hearing pending a probe by his staff of the Comptroller's regulation of the Bank of New England, which failed in January. The senator's investigation might not be finished until late July or August.
Mr. Riegle may bring the General Accounting Office into the investigation, which could delay Mr. Clarke's day of judgment even longer.
Bond Trades at Issue
The Washington Post article accused Mr. Clarke of violating conflict-of-interest guidelines in his personal investing. The article said Mr. Clarke made more than 100 stock and bond trades, including junk bonds. Mr. Clarke sits on the boards of both the Federal Deposit Insurance Corp. and the Resolution Trust Corp. The RTC is the largest single owner of junk bonds, which it inherited from failed S&Ls.
The ethics report -- a product of the Office of Government Ethics and representatives from the Treasury Department, Comptroller's Office, and FDIC -- found that Mr. Clarke bought junk bonds 26 times between February 1987 and December 1990 and sold junk bonds 12 times. But it concluded that Mr. Clarke had no inside information with which to guide his buy and sell decisions.
"Mr. Clarke could not have obtained any specific nonpublic RTC information about high-yield bonds without going through OCC or RTC staff," the report stated. "OCC and RTC staff confirm that he has not done so."
The Post article also said that he held a loan from a state-chartered bank that later merged into a national bank, which is regulated by the Office of the Comptroller of the Currency; and that he lent $320,000 to an employee, Dana Cook, in violation of OCC regulations.
Mr. Clarke said he had invested money in a partnership with Mr. Cook and not lent him money, and Treasury agreed.
Mr. Cook, a special adviser at the agency, subsequently resigned to take a job with KPMG Peat Marwick in Houston. But he was in the process of being rehired when the ethics flap occured.
Mr. Cook said Tuesday that he and Mr. Clarke decided it would be better if Mr. Cook did not return to the OCC.
"Everyone was concerned about how effective I would be because of this perception that Clarke and I are too close," Mr. Cook said in an interview yesterday. "When you soar with the eagles, sometimes you get too close to the sun."
Mr. Clarke asked the Treasury to review his finances after the Post ran its articles to see if he had broken any rules. He also set up a blind trust -- an approach used by many government officials to shield themselves from conflict-of-interest charges. Mr. Clarke is said by friends to be extremely upset by questions over his finances.
"I hope that the results of this review, along with my decision to put all eligible assets in to a qualified diversified blind trust, will put to rest any questions about my financial transactions," Mr. Clarke said in a statement Tuesday. "I look forward to moving ahead with the confirmation hearings on my nomination."
Mr. Clarke also disclosed Tuesday that he has decided to recuse himself from any matters dealing with Citizens and Southern National Bank of Atlanta. Mr. Clarke has a minority interest in a company that is invested in a limited partnership that has a line of credit from C&S, an OCC spokeswoman explained.
PHOTO : Robert L. Clarke Still faces hurdles for new term