The Secrets Of Rubbergate

It's early December, 1990--orientation day for the House of Representatives. Like a bunch of awestruck college freshmen, three dozen newly elected members are milling around the coffee and danish table in the Cannon House Office Building. They are about to begin a series of seminars explaining how to run a congressional office and tap into the House's intricate system of allowances for everything from staff to stationery. In their orientation packets, they find a long list of perks--and instructions on how to obtain a book of checks for drawing funds from their own non-interest-bearing accounts at the House Bank.

Unbeknownst to the newcomers, Jack Russ, then sergeant at arms, assigned them accounts even if they didn't ask for the privilege. Some members, recalling the situation today, admit they were puzzled. "The first question most of us had was why anyone would want to put money in a non-interest-bearing account," says one House member. The answer was never written down, but Hill veterans knew the secret: The bank provided free overdraft protection worth up to $2,000 a year and, indirectly, interest-free loans up to a members' net monthly salary, or about $7,000. This more than compensated for the lack of interest on deposits.