The Vice-President's son, Jeb Bush had a hand in another thrift failure, Broward Federal Savings and Loan in Sunrise, Florida. As the Wall Street Journal and Washington Post told the story:
Broward loaned $4.5 million in February of 1985 to real estate developer J. Edward Houston. The only security Broward S&L required was a personal guarantee from Houston. The same day Houston received the Broward loan, another Houston entity loaned the same dollar amount to the partnership of Jeb Bush and Armondo Codina, who, with the funds purchased a Miami building. The Houston entity required the partnership to repay the loan only if rents from the building were enough to cover the repayment.
No repayments were ever made on the loan and in 1987 Houston defaulted on his loan from Broward.
In 1991, after the thrift had collapsed with $285 million owed to depositors, the FDIC sued the Directors of Broward Federal for negligent lending practices, citing the Bush/Codina loan structure as being one example that contributed to the collapse. Eventually, in settling with Jeb Bush, the FDIC allowed the Bush/Codina partnership to keep ownership of the Miami building by repaying just $500,000 of the original $4.5 million loan.
Follow up references:
Wall Street Journal, Aug 9, 1988, page A1.
Washington Post, October 15, 1990, page A24.
Austin American Statesman, May 17, 1992, page G1.
The Nation, Dec 11, 1990.
Copyright: Phil Anderson, 2004