Rather than face a lengthy investigation, assistant House Democratic leader Tony Coelho is wisely going to resign his seat in Congress.
Coming on top of the scandal involving House Speaker Jim Wright and reports of his impending resignation, too, Coelho's departure throws the House leadership into turmoil.Even so, Coelho's decision to step down reflects better judgment than the representative from California has displayed in some of his own financial dealings. Those dealings have certainly been tangled.
A few weeks ago The Washington Post disclosed that in 1986, Coelho made an "unusual" $100,000 investment in high-yield junk bonds issued by Drexel, Burnham Lambert Inc., whose junk-bond chief, Michael Milken, has been indicted.
The initial purchaser of the bonds was listed as Coelho's campaign committee, a transaction that would have violated House rules since campaign funds cannot be converted to personal use. Coelho said, however, that he bought the bonds with his own money and assumed the listing in his campaign committee's name was the result of a "computer error."
In a further explanation the other day, Scripps Howard News Service reports, Coelho said that a savings and loan executive, Thomas Spiegel, actually bought the bonds first because the congressman lacked the money to buy them. Spiegel held them for a month until Coelho raised the $100,000 through loans, including $50,000 from Spiegel's savings firm. Coelho had not reported the loan from Spiegel's institution on his House financial disclosure statement, but said he would now list it in an amendment.
Coelho held the bonds for more than four months and then sold them, earning some $13,000.
During the time Coelho held the bonds, he was chairman of the House Democratic Campaign Committee, to which Drexel's Political Action Committee was a big contributor. The Drexel PAC, according to the Post, also contributed $8,000 to Coelho's personal PAC, and the Drexel firm paid the congressman $4,000 in speaking fees in 1986 and 1987.
By deciding to resign, Coelho did the best thing for all concerned. As he put it, "I don't intend to put my party through more turmoil. I don't intend to put this institution (the House of Representatives) through more turmoil. And more importantly, I don't intend to put my family through more turmoil."
Are you listening, House Speaker Jim Wright?