Davis Attack Ad Blames Simon for ’93 S&L; Failure

In his first television ad attacking his Republican challenger, Gov. Gray Davis on Monday accused Bill Simon Jr. of mismanaging a savings and loan at a cost of millions of dollars to taxpayers.

The spot seeks to raise doubts about Simon’s job qualifications before the little-known GOP nominee introduces himself to voters on his own terms.

“Bill Simon: If he can’t run an S&L;, how can he run California?” a narrator asks.

The ad refers to Western Federal Savings and Loan, a Marina del Rey thrift seized by the government in 1993. Simon was on its board of directors.

Late Monday evening, after a conference call with his advisors, Simon told reporters that the governor had launched the negative ad to distract from his own shortcomings.

“I was not responsible for the failure of the savings and loan,” he said. “A board member does not run a company, as is well known. It’s just a shame that Davis has to stoop to inaccuracies or worse.”

The 30-second spot launches a season of attacks and counterattacks in television ads that will cost the Davis and Simon campaigns tens of millions of dollars.

Since Simon’s surprise victory three months ago in the GOP primary, he and the Democratic incumbent have sparred mostly in newspaper headlines.

Davis started running TV ads touting his record on crime and other issues last week, but Simon, who is millions of dollars behind the governor in fund-raising, has not gone on the air.

The S&L; spot builds on the negative image of Simon that the governor has tried to project for weeks by having campaign aides label him “rich-kid Billy Simon.”

The spot says Simon “inherited a fortune” and directed an S&L; that “made bad loans, went belly up and was seized by the government.”

Simon’s “mismanagement” cost taxpayers $90 million, it says, and now he “is suing the government, asking taxpayers to pay him back his investment.”

“He’s out there every day accusing the governor of gross mismanagement,” said Davis strategist Garry South. “We think it was high time that he had to answer for some of his own mismanagement in the private sector.”

Simon faced a similar attack in the primary from GOP rival Richard Riordan.

The former Los Angeles mayor ran an ad saying that Simon “cost taxpayers $92 million in a failed savings and loan.”

Simon has denied that he mismanaged Western Federal. As a board member, he contended, his role was to monitor his family’s $40-million investment in the thrift.

The Simons and their partners allege in a lawsuit that the government improperly seized Western Federal. The suit says the government caused the thrift’s collapse by reneging on its agreement to relax minimum capital standards for the S&L.;

The Davis ad questions Simon’s integrity at a time when the governor is mired in a state software contracting scandal. Davis also has faced bad publicity over his aggressive solicitation of campaign money.

In public remarks about Simon, Davis has focused mainly on ideology, using his rival’s opposition to abortion rights, for instance, to cast him as more conservative than most Californians.

To reach beyond his conservative base, Simon has begun emphasizing environmental issues.

In Santa Barbara on Monday, he promoted his plan to phase out offshore oil drilling. In Los Angeles, he called for a $1-billion bond issue to expand California’s parks.

GOP strategist Arnold Steinberg said it was noteworthy that Davis’ first ad against Simon steered clear of abortion, which voters might view as a diversion from state budget troubles. The S&L; ad poses “a key test of the crisis management of the Simon campaign to see how well they respond,” Steinberg said.

“S&L; is a buzzword for people losing money,” he said.

Simon strategist Jeff Flint said that Simon would go on the air “as soon as we think it’s necessary,” but that the Davis ad “could accelerate our schedule.”

With relatively scarce campaign funds, Simon risks running out of money if he advertises too soon. The November election is nearly five months away.

Simon is a multimillionaire who could tap his own fortune (his family put $5.5 million into the primary), but donations could dry up if he gives the impression that he could get by without them.

The S&L; spot will run in the same Central Valley and Los Angeles media markets where Davis last week began running the ads promoting his record.

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Times staff writer Matea Gold contributed to this report.