RTC lawyers who blew whistle say they fear reprisals One of the lawyers complains her career is "in jeopardy."


WASHINGTON -- Two government lawyers who raised questions about the federal commitment to recover money from officials of failed savings and loans said yesterday that their efforts had placed them in a professional twilight zone.

Jacqueline P. Taylor and Bruce Pederson harshly criticized their employer, Resolution Trust Corp., at a Senate hearing Tuesday, lamenting what they regard as the political influence that is weakening their agency's efforts to recover money from wrongdoers in the savings and loan industry.

"I'm a licensed attorney practicing for eight years in Colorado and practicing for seven years in Minnesota; this is all in jeopardy," Ms. Taylor said yesterday in an interview at her lawyer's office, a short distance from the Senate hearing room where she testified Tuesday. She has been demoted and reassigned from her position in Denver overseeing RTC cases against former S&L; officials.

Mr. Pederson, a manager in the Denver office, said he also had been demoted.

Albert V. Casey, president of the RTC, assured senators Tuesday that there would be no reprisals against the lawyers for their testimony, in which they talked of political pressures not to pursue certain cases aggressively.

Appearing more relaxed than she did Tuesday, but still perplexed, Ms. Taylor said, "For me personally, it's been hurtful. Is it worth it? If it stops the damage."

Ms. Taylor and Mr. Pederson filed a class-action grievance with the RTC in what they called an attempt to restore the independence and effectiveness of their office.

They said they were motivated in part by the recent death of another lawyer in the Denver office who also aggressively pursued cases against former S&L; officials.

Mr. Pederson said part of the reason he came forward to criticize his own agency was purely emotional. "A former colleague died recently of a heart attack at 36. It has an effect on you," he said.

The unit where they worked is called "professional liability." This once obscure legal and regulatory backwater has increasingly taken on political coloration, the two lawyers say, as the professional liability unit's staffing and policies are diluted.

Mr. Casey has said in public statements that the RTC intends to vigorously pursue all wrongdoers. But more quietly, as part of the Bush administration's election-year deregulatory efforts, top administration and White House officials have been involved in discussions about whether the government should change its guidelines for suing former officers and directors of failed banks and savings and loans, according to documents and officials.

A recent draft guideline circulating among federal agencies would make it harder to sue some directors, the lawyers say.

Even if that guideline is not adopted, they say, they have detected a subtle relaxation of the standard in practice.

The people who stand to gain most from eased guidelines are the thousands of former directors of failed savings and loans and banks. Some, such as Edward R. Madigan, the secretary of agriculture, and Edward J. Derwinski, the veterans affairs secretary, are politically influential.

Others are prominent citizens, and many have never been accused of wrongdoing before.

They often complain that they are simply innocent victims of a bad economy and should not be sued by the federal government.

In her testimony, Ms. Taylor said the agency recently dropped plans to sue officials of an unnamed institution around the time one of the officials visited with President Bush. She criticized the decision to resolve the case out of court as "an inappropriate settlement because of political reasons."

Officials who asked not to be identified said the institution at issue was Deseret Federal Savings and Loan, based in Salt Lake City, before it was taken over by the government in 1989.

A longtime outside director of the savings and loan, Howard W. Hunter, is a senior Mormon church official and was one of a number of church officials who met with President Bush last month in Salt Lake City.

A church spokesman, Don Lefevre, said the savings and loan litigation was not discussed at the meeting.

Ms. Taylor said she had tried to be careful and balanced in deciding whom to sue. she worked mainly for private financial institutions before joining the RTC last year.

"There were many times we received exculpatory information that certain targets had not done anything negligent, and we dropped them" as potential defendants, she said.

Mr. Pederson, in contrast to Ms. Taylor, has spent much of his legal career working for the federal government, including a stint at the Federal Deposit Insurance Corp.'s professional-liability unit.

Because the government insures S&L; deposits, it must pay for the cost of bailing out failed institutions. The less money the government recovers from wrongdoers, the more taxpayers have to contribute to the cost of the rescue, now estimated at more than $300 billion.

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