So who were the players? Let's start with card number 1, which had Ronald Reagan on it. He signed the Garn-St Germain Act in 1982 -- the legislation that deregulated the savings and loan industry--and he allegedly said it was "the most important legislation for financial institutions in fifty years...I think we have hit the jackpot." And indeed, his friends did.
Card number 14 was Neil Bush -- George W's brother, and George H. Bush's son. In 1985, he started his own savings and loan called "Silverado Banking." Heartwarming name, isn't it? He also had his own oil company, "JNB Exploration," which benefited from millions of dollars of loans from his savings and loan. His oil business didn't go well, and he didn't have to pay back the loans. And his two business partners (who were also investors in his oil company) got $90 million in loans from Silverado, which they defaulted on. According to the story, his father (then the vice-president of the USA) protected him with a team of legal specialists, and Neil got away with "a slap on the wrist."
So let's talk about the father. George H. Bush is on card number 16. As vice president, according to this card deck, he chaired the Presidential Task Force on Deregulation. They didn't just work on deregulating the banking system, but also on issues that affected things like consumer safety. But he allegedly had close ties to some of the other players in the savings and loan scandals, too--not just his son--receiving a $100,000 gift to his 1988 presidential campaign from Charles Keating himself (as in "The Keating Five," which John McCain was part of). There's speculation, not proven, that he delayed the seizure of his son Neil's Silverado Banking venture till after the 1988 election. The day after he was elected president, the bank was seized. It could just be a coincidence...
Now here's a blast from the past. Card 21....Don Regan. He was first the Secretary of the Treasury under Reagan and then Chief of Staff. But before he became part of the Reagan government, he was the head of Merrill Lynch, which is back in the news again now. According to the chronology, while heading the Treasury Department, he used his treasury position to try to deregulate the savings and loans even further. Later, he was linked to the Iran-Contra scandal and forced to resign.
Oh, but here's one more card of particular interest. Card number 35 is Alan Greenspan, former chair of the Federal Reserve. Another proponent of deregulating the banking industry, he used to work for Charles Keating. According to the card, he also pressured Congress to abolish the Glass-Steagall Act, which was created in 1933 to keep banks out of "risky businesses like stock market and real estate." How ironic that the Glass-Steagall Act created the FDIC, the very entity that is set up to rescue the failing bank institutions (and presumably our deposits) today.
Looking backwards at stories like these help to form a bigger picture of the financial debacle now, and I thought I'd take a break from rearranging my deck chairs on the Titanic to share them with you.
"The Savings and Loan Scandal Trading Cards" are copyright 1991 through Eclipse Enterprises in Forestville, CA. I don't know if they're still for sale today.
No comments:
Post a Comment