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Now, I don't have a problem dealing with the Whitewater question at the appropriate place and time. I have called the hearing this morning to deal with an issue within RTC, which is an institution that will be out of business in about 22 months. My concern now is for a class of people that have been mistreated in this country forever.
The good old white boys and white girls who are a part of Whitewater, and every other one of the institutions that are a part of the S&L, that is you all's business. Today's business has to do with women and minority-owned businesses. And that is where I am going to focus the hearing. That is what we are going to deal with. And on March 24, I will be there so that we might be able to share on the Whitewater hearing.
Mr. ROTH. Thank you, Mr. Chairman. I think I have been gracious in allowing you to make your statement on my time.
Chairman FLAKE. It works the other way, too.
Mr. ROTH. Let me just say that I consider this extremely serious. In our previous hearing you said to me, we will have an appropriate time for those kind of questions. That was weeks ago. Now these questions will come up later on. Yet, I see on the front page of The Post, which is certainly not a conservative newspaper, talking about Mr. Hubbell being investigated by his own law firm, whether he was overbilling the people at Madison Guaranty Savings and Loan. That savings and loan, Mr. Chairman, and members, cost the American taxpayers $60 million.
Mr. WYNN. Point of order, Mr. Chairman.
Mr. ROTH. When, Mr. Chairman, are we going to start asking sowie questions?
Chairman FLAKE. When we have a hearing on that matter.
Mr. ROTH. The American people lost billions of dollars in the S&L cleanup.
Mr. WYNN. Point of order, Mr. Chairman.
Chairman FLAKE. And African-Americans have been losing since the last century. It is time for us to deal with that issue.
Mr. ROTH. It is about time that we ask some questions. Mr. Chairman, if I could be permitted to make a statement. I didn't interrupt you. How about letting me make a statement?
Chairman FLAKE. I will if you will speak to issues germane to this hearing, sir.
Mr. Roth. I am speaking to issues germane that
Mr. ROTH. Mr. Altman was asked to be before this subcommittee. He didn't show up. What is he hiding from us?
Chairman FLAKE. He is not-
Chairman FLAKE. No, it is the full committee—the full committee has consented that it would hold a hearing.
Mr. ROTH. This is being swept under the rug. The newspapers around the country are screaming about it in headlines.
And the majority, you have ruled this House of Representatives 40 continuous years, will not allow these questions to be asked.
Chairman FLAKE. You are out of order.
Mr. ROTH. There are serious—I am not out of order. I am totally in order, Mr. Chairman.
Chairman FLAKE. You are out of order.
Chairman FLAKE. I recognize Mr. Watt, if you are not going to ask a question relative to women and minority-owned businesses. I will recognize Mr. Watt.
Mr. ROTH. Mr. Chairman, it is a serious situation. It
Mr. ROTH. The head of RTC goes to the White House and has a meeting with key people at the White House and gives them a heads-up briefing when you have an investigation as huge as Whitewater. This is a serious situation, Mr. Chairman, and
Chairman FLAKE. Your time has expired, Mr. Roth.
Mr. ROTH. I am going to ask you again to have a hearing to allow the American people to know the truth. What are you afraid of, what are you and the majority party afraid of?
Chairman FLAKE. I am afraid of nothing. I may be a part of a majority party, but I am a part of a minority race that is suffering because all too often your issues get in the way of letting us bring to full circle those issues that are important to all citizens. There are some who have been discriminated against, and I do think you understand that.
Mr. Watt, you are recognized.
Chairman FLAKE. It would appear, but that is OK. He and I have an understanding.
Mr. Watt. I didn't intend to and if I was responsible for mentioning that unseemingly word in setting that off, I apologize to the chairman and the subcommittee.
I wanted to ask a few questions about the statistics that appear in your statement. Mr. Ryan, on page 3 and page 5, and I want to go at it a little more from the qualitative part of this rather than from the quantitative part. As I understand the statistics that we have there, you are awarding 33 percent of the contracts to minority and women's businesses; is that correct? Mr. RYAN. Correct.
Mr. Watt. Yet, you are paying many only 21 percent of the fees that you are expending to minority and women enterprises.
Could I surmise from that that the quality of the contracts that you are awarding to minority contractors is substantially different than the quality of the contracts you are awarding to non minorities or am I just-or should I read that minorities are a lot more efficient in their billing practices and get the job done a lot cheaper for the American people?
Mr. RYAN. I think it is probably—I think you can infer from this that some of the contracts let to minority and women-owned businesses are smaller than those let to nonminority firms. However, I can attest that recently there have been some rather significant joint venture contracts let where minority and women-owned businesses were major participants in those contracts. We are seeing larger and more important contracts being let to joint ventures with minority and women-owned businesses.
Mr. WATT. Are you all still following the policy that minority contractors must have a big brother to give them credibility as you were when I was in private practice?
Mr. RYAN. Not at all. No, sir. Not at all. We have some
Mr. Wart. Then why is there the necessity for you to talk primarily about joint ventures?
Mr. RYAN. The one
Mr. Watt. Isn't that a mentor-mentee kind of relationship that RTC is setting up there where essentially what you are saying is you don't feel comfortable with minorities doing the work unless they have a mentor involved in the joint venture with them?
Nr. RYAN. No, I don't think that is a fair inference at all. I think that some of the major contracts that we have let recently have had joint venture participation by minority and women-owned businesses because they have been very large contracts.
Then we have other contracts that are let to prime contractors that are minority and women-owned businesses that are large as well. We have no view as to whether one group is more qualified than another. We look at each contract on its individual basis and we look at the expertise and we provide technical advantages for some minority and women-owned firms. We do not encourage joint ventures, but it seems to be a good way for some minority firms to get some of these contracts, frankly.
Mr. Watt. Mr. Ryan, if I didn't know better, I would, from personal experience, I would say what you said sounds good, but I mean I was with a law firm that had been in existence for over 30 years that had taken more cases to the U.S. Supreme Court than any major white law firm in this country, and RTC was still saying to us that we needed a mentor to go into court and litigate a case, and I think that is inexcusable if that is the mentality that this agency continues to have and I will let that go.
Let me go on to page 5 where it seems to me that the disparity is even greater. You have a 33 percent award on nonlegal work and 21 percent of the fees, yet in the legal area, you have 35 percent of the total firms on your list, minority firms as I understand these statistics, yet you are paying only 13 percent of legal fees to minority firms. Is that-do I understand these figures correctly? Mr. RYAN. That is correct.
Mr. Watt. Tell me, if you would, what accounts for-I mean, how could you have 35 percent of your available list be minorities and be paying only 13 percent of the fees to minorities?
Ms. Kulka. Mr. Watt, perhaps I can respond. As you may know, I am very recently on board at the RTC having become general counsel in the middle of January and this is an area of interest to me, and attention--and I have been through some analyses—and more, of course, attention will be paid to this. But as I understand the numbers, while we have a 33 percent referral of all matters in 1993 to minority firms, we are reflecting when we look at fees actually paid, fees paid not only on those specific new referrals, but fees paid in 1993 on legal work that has been awarded in prior years and that continues into 1993. So that you see the statistics that are presented reflect for all fees paid, those paid not only on the 1993 referrals, but on all fees paid to all law firms, and I think we may be able to give you some more detail with respect to the percentage of fees that are paid on these referrals that match with the year in which they are referred and we will try to provide that, if you would like.
[The information referred to can be found in the appendix.] Mr. Watt. And if I follow that analysis carefully, I should see in 1994 and 1995, 1996, 33, 34 percent of the contracts being awarded and 50 percent of the fees being paid to minorities. You think that is going to happen?
Ms. KULKA. I absolutely do not think that will happen and I do think when you have a cumulative number you are always working with a large base which I understand in the early years did not reflect any meaningful participation of minorities and women, and that is something that has been addressed, and I believe that Ms. Booker's efforts have resulted in a substantial increase of participation in 1993. And while that will be reflected, it is my belief an increased percentage of fees in 1994 and 1995, I don't believe that will ever get to the percentages that you have indicated.
Mr. WATT. And when is it we anticipate RTC going out of business? We are going to get to some level of parity when we close down business? Is that
Ms. KULKA. I think that the effort is there and it is something that I am committed to, as well as our Minority and Women's Program Office being committed to it, and to the extent that we are out there continuing to engage law firms, we will be seeking to engage minority and women law firms as meaningful participants in the process.
Of course, you understand that we also have a mandate to do as much work in-house as we can in a cost-effective manner. As we continue our process, there will be fewer opportunities for all law firms as we go forward toward our sunset and that will affect the contract letting as well.
Mr. Watt. So by the time we perfect this program, there won't be an outside program. You will be doing it all in-house and we will be arguing about something where the horse is out of the barn again, I guess.
I don't mean to sound like you are not making efforts, but did I understand you to say that 33 percent of the referrals that you are making now are to minority firms?
Ms. KULKA. It is my understanding that the referrals made in 1993 were 33 percent to minority-owned firms and 23 percent to women-owned law firms.
Mr. Watt. That is this 33 percent, which is inclusive of that 23 percent, not cumulative, because that would be a total of 56 percent going to minority and women.
Mr. RYAN. That is right.
Mr. Watt. You are now telling me that 56 percent of the contracting that RTC is doing with lawyers is with minority and women?
Ms. KULKA. In 1993, that was the case.
Mr. Watt. And on a quantitative, qualitative basis, would the percentages of fees generated by those contracts be roughly equivalent to 56 percent?
Ms. KULKA. No, I don't believe they are, but I do believe there is substantial improvement in the percentage of fees against percentage of contracts compared to prior years, and I think we may be able to give you some more information on that.
Mr. Watt. And what would account for the fact that they would not be qualitatively roughly equivalent?
Ms. KULKA. I don't know what you mean, sir, by qualitative. If you are talking
Mr. Wart. I am talking about the amount of fees that they generate. I assume much is based on the qualitative value of the contract that is awarded.
Ms. KULKA. I really don't Mr. Watt. Unless black lawyers are charging less fees than white lawyers.
Ms. KULKA. I really think I need to look at this more carefully so I can respond thoughtfully and not guess at it, and I would like the opportunity to do that.
[The information referred to can be found in the appendix.]
Let me just ask a couple of questions. SAMDA contractors are ranged and rated with other SAMDA contractors. The evaluation criteria can be quantified with income to expense ratios, percentage of MWOB subcontracting, and so forth. Is it fair to use subjective criteria like attitude, responsiveness, cooperation, as it was done to evaluate some minority SAMDAs or as has been reported to us.
Mr. RYAN. We just don't know. We will have to respond for the record.
Chairman FLAKE. Would you please respond for the record. [The information referred to can be found in the appendix.]
Let me ask if you would-you indicate on page 13 that there are 10 institutions and 35 branches of 11 other institutions which would qualify under the PMN definition. Would you mind submitting for the record for the subcommittee the names of those institutions?
Mr. RYAN. Certainly.
Chairman FLAKE. Thank you very much. And Mr. Roth, because he believes in diversity and fairness and inclusiveness, has some questions regarding women and minority-owned businesses.
Mr. ROTH. Thank you, Mr. Chairman, and, Mr. Ryan, you don't mind answering a few questions, do you?
Mr. RYAN. Not at all.
Mr. ROTH. Great. Have you talked with Mr. Altman about minority contracts? Mr. RYAN. Certainly, I have.
Mr. Roth. Have you ever discussed the Madison Whitewater with Mr. Altman?
Chairman FLAKE. You mean black water? Go on, Mr. Roth.
Mr. ROTH. You have. Did you prepare Mr. Altman for the meeting with the White House officials?
Mr. RYAN. No, I didn't.
Mr. ROTH. You did not. Did Mr. Altman tell you he was going to the White House; did you ever discuss that with him?