Arizona Sen. Dennis DeConcini wrote an aide in 1986 asking what ``we can do to bring heat'' on a federal banking regulator who was opposed by savings and loan owner Charles H. Keating Jr., the Senate Ethics Committee was told today. The senator's memo to his staff aide, Laurie A. Sedlmayr, was written in December 1986, after Keating had made clear his opposition to top bank regulator Edwin Gray, who wanted Keating's thrift to adhere to investment limits. Committee special counsel Robert S. Bennett cited the memo in questioning Sedlmayr as the panel held its fifth day of hearings into allegations DeConcini and four other senators improperly intervened with regulators on behalf of Keating, a financial contributor. Sedlmayr said she was aware Keating wanted Gray out of office. DeConcini wrote her a memo on Dec. 11, 1986, citing press accounts of potential financial and ethical problems facing Gray and asking, ``Anything we can do to bring heat?'' She said she responded five days later saying it was ``probably unnecessary'' for him to take action and suggesting the senator ``stay out of this.'' Sedlmayr, under questioning by Bennett, said Keating was more aggressive than many other businessmen she dealt with. ``I found him to be something of a zealot and I wasn't comfortable with that,'' she said. ``I think the senator probably thought I was overstating the case,'' she said. Keating, who owned the now defunct Lincoln Savings and Loan, and his associates contributed $1.3 million to the senators' campaigns or favored causes. As the panel began its fifth day of hearings in three weeks, DeConcini, D-Ariz., was the only one of the five senators under investigation who attended the session. The other four are Republican John McCain of Arizona and Democrats Alan Cranston of California, Donald Riegle of Michigan and John Glenn of Ohio. Sedlmayr was questioned about a memo she wrote to DeConcini in 1987 suggesting a possible deal with the government on behalf of Keating's savings and loan. DeConcini denies he offered a deal or tried to negotiate for Keating in the April 2, 1987, meeting. Sedlmayr testified that DeConcini went to the April 2 meeting with three other senators and Gray despite being warned by an aide that the session was a ``political mistake.'' She testified that she was not concerned about the propriety of the meeting, but was concerned Gray ``would misrepresent it'' later. ``I told him I didn't think it was a good idea and could later be misinterpreted by the press,'' she said. ``I thought ... it was a political mistake.'' Sedlmayr and other aides were not included in the meeting, but she said that when it ended, DeConcini ``said he was pretty disgusted.'' She said DeConcini recounted that Gray had said, ``I don't know anything about Lincoln, I don't have any information and you'll have to meet with the regulators in San Francisco.'' Riegle, chairman of the Senate Banking Committee, did not attend that meeting. However, he did attend a session on Lincoln a week later with the other senators and San Francisco-based federal regulators. The question of whether DeConcini offered a deal on Keating's behalf is considered crucial to the ethics investigation. Bennett, told the panel ``there is overwhelming evidence'' DeConcini asked Gray to withdraw a regulation opposed by Keating in exchange for a promise by Lincoln to make more home loans. The regulation limited Lincoln's ability to make risky investments in speculative real estate ventures. Sedlmayr's memo to her boss detailed ``What American Continental wants from Gray for concessions,'' and ``What American Continental is willing to do.'' American Continental was Lincoln's Phoenix-based parent company, controlled by Keating. A sworn statement by another Senate aide says that DeConcini took the Sedlmayr memo with him to the April 2 meeting and ``made verbal references to the subjects discussed in the memorandum.'' That statement was by Mary Jane Veno, administrative assistant to Glenn. She said she was told of the memo's use by Gene Karp, DeConcini's administrative assistant. When the meeting was over, she said, McCain asked DeConcini to explain what he had been talking about and in response DeConcini gave McCain a copy of the memo. But Karp said Friday he did not know if DeConcini actually referred to the memo and could not recall what he told Veno. ``As I remember it now, Gray said at the very beginning he didn't know anything about Lincoln and DeConcini never got into the subject matter of the investigation or anything about that,'' Karp said in an interview with The Associated Press. ``Whether there was any specific reference made, I can't answer. Only the principals that were there can answer it.'' Gray has said DeConcini offered a ``quid pro quo'' proposal and that Gray believed the meeting was improper. No aides attended the April 2 meeting, and Bennett said there is evidence DeConcini's office instructed all to come alone. Lincoln was the object of a bank board examination at the time of the meeting. Bennett said the senators were there ``with varying degrees of intensity, to pressure the board to end promptly the Lincoln examination.'' Lincoln was seized by the federal government in April 1989 at a potential bailout cost to taxpayers of more than $2 billion to cover insured deposits.
