Word: silverado
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Government examiners had ample clues to what was going on. But as David Paul, Colorado's financial-services regulator, told a congressional panel, "Silverado spared no expense to convince the regulators of their prudence." Paul said Silverado had brought "enormous management, consulting, accounting and legal resources to bear to rebut regulators' concerns." And the fast-talking Wise had the ear of Mowbray, the chief regulator in Topeka, who seemed to give Silverado the benefit of every doubt...
Wise was well connected, and so were the real estate honchos who were part of the Silverado juggernaut: Walters, Good and Mizel. Walters had his own bank and a high profile as an extravagant political contributor. Mizel and his M.D.C. Holdings dominated the Denver housing market. He reinforced his clout with hefty political contributions to local, state and national politicians. In 1986 he was host at a luncheon attended by President Reagan and raised $1 million for the Republican Party...
...contractors to admit that they too had been pressured by M.D.C. into making similar donations. "We were told that Mizel wanted to look good," said a major contractor who gave $40,000 to various campaigns at M.D.C.'s orders. "The money came back to us from Lincoln Savings and Silverado...
...bonds, mostly handled by Drexel Burnham Lambert, and carried out elaborate deals to swap the bonds and other assets. Some of the bonds were used to artificially shore up ailing thrifts or were sold in multimillion-dollar lots to cooperating S&Ls. Federal investigators are giving particular scrutiny to Silverado, Charles Keating's Lincoln S&L in California, CenTrust Bank in Miami, and San Jacinto Savings in Texas. Each had extensive business dealings with Drexel and with one another...
Milken had profitably discovered that S&Ls could use junk bonds in two ways: to borrow money for expansion and to invest money for a high rate of return. M.D.C.'s Mizel, hard pressed by the economic downturn in Denver and kept afloat by insider swaps with Silverado, met the junk-bond king in Manhattan and became Milken's enthusiastic client. So too did the influential Norman Brownstein, an M.D.C. board member and Mizel's attorney, who lobbied in Washington in favor of the use of junk bonds...