WASHINGTON -- As Rep. Henry J. Hyde takes control of the House Judiciary Committee next week, the Illinois Republican holds an ironic distinction: He is the only member of Congress being sued by the Resolution Trust Corp.
The thrift-bailout agency accused Rep. Hyde, 70, of gross negligence in 1993 for his role in a $17.2 million loss at Clyde Federal Savings and Loan Association, where he had been a director. The $687 million-asset thrift eventually failed, costing taxpayers $67 million, the agency estimates.
Rep. Hyde, who with 20 years experience is the House's fourth-ranking Republican, has denied any wrongdoing.
The RTC suit harks back to Rep. Hyde's days as a Clyde director from 1981 to 1984. The North Riverside, Ill., thrift failed in 1990 after losing money on out-of-state construction loans and engaging in high-risk options trading.
The suit, pending in U.S. District Court for the Northern District of Illinois, accuses Rep. Hyde and 11 other Clyde Federal directors and officers of negligence, gross negligence, breaching their fiduciary duty, and breaches of contract.
Settlement negotiations between the government and Rep. Hyde went nowhere, Rep. Hyde's lawyer, William J. Harte of the Chicago-based law firm William J. Harte Ltd., said this week.
Several congressional sources say that the suit against Rep. Hyde has drawn little attention so far and is therefore unlikely to do so in the future. Members of Congress are reluctant to raise such issues because many in both parties have links to failed thrifts.
But the suit could draw more attention as Rep. Hyde's party takes control of Congress.
As Judiciary Committee chairman, Rep. Hyde will head the panel with a key role in four of the 10 Republican "Contract with America" initiatives, including litigation reform. Republican proposals for litigation reform would create disincentives for lawsuits, reduce some companies' liability when their products harm people, limit punitive damages, and limit shareholder lawsuits.
Washington lawyers said it is unclear whether the reform would affect suits like Rep. Hyde's.
Scott B. Schreiber, a senior partner at Arnold & Porter, said the litigation reform proposal and any resulting law might dampen the mood for suits against directors and officers of failed savings and loans, but most likely would not directly affect suits like that against Rep. Hyde, which the government has already filed.
There is also some dispute over whether Rep. Hyde's so-far free legal services constitute a gift, which is prohibited by House ethics rules.
Mr. Harte said early this week he has not billed Rep. Hyde because the two are old friends. Asked whether he planned to present a bill, Mr. Harte repeatedly refused to say. He would only say that when the case is resolved, "I suppose we'll sit down and talk."
But Bernard Raimo, chief counsel of the House Ethics committee, said, "A law firm can't just willy-nilly donate its services to a member. At some point, he has to pay for it in some fashion."
On Thursday, Mr. Harte, told of these concerns, said, "Since your periodical has raised the question of ethics here, I am going to bill him for every minute."
Rep. Hyde has obtained permission from the House Ethics Committee to set up a legal defense fund to pay his fees, and to use campaign contributions to pay part of the tab. But Mr. Harte said on Thursday that Rep. Hyde would not be setting up a legal defense fund.
A House Banking Committee staffer said it may be difficult for Rep. Hyde to chair the Judiciary Committee because of the pending lawsuit. For instance, last year, the committee considered bills that dealt with the statute of limitations the RTC must abide by and other directors' liability issues.
"It is one thing when you are just a member -- you can just recuse yourself and not vote," the staffer said. But because Rep. Hyde is now the committee's chairman "he is in a position where he sets the agenda -- it is hard to see how a chairman recuses himself from a subject matter."
Mr. Harte said that if Rep. Hyde feels he needs to recuse himself from any issue before the Judiciary Committee, he will. Mr. Harte downplayed Rep. Hyde's role as a director at Clyde, which paid $4,000 a year.
"He needed it like he needed a headache," Mr. Harte said. "He did it as a favor for a person he knew at Clyde."
The RTC insists its lawsuit against Rep. Hyde is sound.
"When someone takes a position as an officer or director of a savings institution, they should view that as more than a ceremonial post for extra income," said RTC spokesman Stephen J. Katsanos. "With the position comes a responsibility to be a steward and ensure the depositors' funds are invested prudently."
Rep. Hyde refused to comment on the matter, and his office referred calls to his lawyer.
The Hyde case has not yet gone to trial. Mr. Harte said a routine public hearing is scheduled for Jan. 30 to assess progress in the case.