Inaction by the authorities, a blind eye to children's pleas, failure to prosecute, a rush to cover up -- all this was happening in the heartland state of Nebraska. To understand how this could be, requires a good look at state politics during the mid-1980s, especially the Robert Kerrey administration of 1983-1987.
Early in the decade, the signs went up, billboard-size with flashing neon lights, that Nebraska was now, more than ever, a "wide open state," to use the terminology of the organized crime-controlled political machines in various parts of the United States during the 1920s and 1930s. Mafia control in those days was so tight in some cities, that opposition newspaper editors were gunned down in broad daylight. A June 1991 article in the Minneapolis Star Tribune recalled, about the history of Minnesota, "Alvin Karpis, onetime Public Enemy No. 1, once said, 'Every criminal of any importance in the 1930s made his home at one time or another in St. Paul. ... If you were looking for a guy you hadn't seen in a few months, you usually thought of two places -- prison or St. Paul. If he wasn't locked up in one, he was probably hanging out in the other.'" In order for the city to have this status, veteran St. Paul Pioneer Press reporter Nate Bomberg has said, "Everybody was in on the take. You can't have an underworld without an overworld. ... You can't have the rackets unless you have the mayor, the chief of the police, and the county attorney in your corner."
1983 was a banner year for Nebraska's building its credentials as a modern such safe haven for crimes and perversions. That was when the state seized Commonwealth Savings, forcing its owners, the Copple family, to ante up any and all company and personal assets to help redeem depositor losses. It was the first year of Bob Kerrey's term as governor of Nebraska.
The case haunts Kerrey to this day.
In 1990, as the price tag for cleaning up failed savings and loan institutions nationwide soared into the hundreds of billions of dollars, one of the loudest critics of the Bush administration's handling of the matter was freshman Senator Bob Kerrey, Democrat of Nebraska. An Omaha World-Herald headline captured the clashes: "Kerrey, Fitzwater Trade Allegations Over Handling of S&L Crisis."
White House spokesman Marlin Fitzwater cautioned Kerrey that as many Democrats as Republicans were involved in the S&L fiasco, and then admonished him in personal terms. According to the July 16-22, 1990 Omaha Metro Update, Fitzwater "added that if Senator Kerrey is bent upon making S&L a campaign issue, it's one that could work against Kerrey. The White House apparently has some files on Commonwealth Savings and State Security Savings, but no details were given."
The mentioned institutions were two of Nebraska's largest industrial banks. They collapsed in 1983 and 1984, shortly after Kerrey's election as governor.
Kerrey knows about his vulnerability. Soon after the exchange with Fitzwater, the senator got himself interviewed by a friendly World- Herald reporter, to come clean about the events of 1983-84. Under the headline "Kerrey: My Errors in Insolvencies Will Not Diminish S&L Scrutiny," he admitted what he had fiercely denied at the time -- that his key adviser on the Commonwealth and State Security crises was his close friend, business associate, and chief financial adviser, Bill Wright. "Regarded by some as one of the cleverest and most ambitious financial operators in the state," according to a brochure from the Lincoln-based Concerned Citizens for Responsible Government, Wright was also a major shareholder and the president of State Security Savings. This relationship, Kerrey now said, may have led to "appearances of impropriety," but this all happened because "I was new to politics."
For informed Nebraskans, Kerrey's confession was a bombshell, as the Metro Update observed: "But what Kerrey -- faced with the absolute imperative to get his own past behind him if he is to have any credible role in the Democratic pursuit of President Bush's handling of the national savings and loan scandals -- told [World-Herald reporter] Kotok is breathtaking in implication. It is especially so for those whose depth of knowledge takes in the entire fabric of the Kerrey Administration: Commonwealth Savings Co., State Security Savings, Kerrey's own panoply of private business dealings, and, finally, the creation and uses of the Nebraska Investment Finance Authority."
According to information published in the Metro Update and other documentation, those implications are that Kerrey and Bill Wright used the powers of state government to: 1) loot State Security's depositors of at least $4 million and as much as $10 million, 2) deprive the depositors of Commonwealth of at least $40 million, 3) set up a new state agency, with the sole apparent purpose of giving Kerrey and his cronies millions of dollars in low interest loans, 4) cheat farmers out of $200 million in subsidized loans, and 5) peddle junk bonds to investors who thought they were getting high-grade state bonds.
The voluminous evidence of these activities can be found in a 1986 state Senate investigation, which I chaired, of the failures of State Security and an Omaha bank, the American Savings Company; in 1988 brochures of the Concerned Citizens for Responsible Government; in the Omaha Metro Update of July 16-22, 1990; in a set of three tightly documented reports submitted to the Nebraska Legislature in 1990 by a group of depositors from the failed Commonwealth bank, led by Reuben Worster of Lincoln and veterinarian Dr. Melvin Bahensky of Rand Island; and in a 1991 tort claim filed by myself as attorney and on behalf of Commonwealth depositors.
According to his own account, Bob Kerrey entered politics to make money. In September 1981, as he was contemplating a run for the Nebraska governorship, Kerrey lamented to businesswoman Dana Saylor Robinson, that in business, "You have to know someone or cater to this or that politician, to get anything. The only way you are going to be able to make any money is to be in politics."
The record shows that, with the advice of financial genius Bill Wright, Kerrey fulfilled his ambition at the expense of the citizens of Nebraska.
