If you look at the recipe for the NSS scandal, you’ll see the ingredients are the same as the Savings & Loan scandal:
1. Greed
2. Big money
3. Lots of crooks
4. The government
5. The hapless investor
I remember reading the news for weeks on end as the S&L debacle unfolded in the mid-80s. I can’t even begin to go into detail on the S&L story. I think every American should read up on it. I guarantee you will become angry! You’ll swear you’re reading fiction. It is beyond insane.
No one who looks at it objectively can blame the Reagan or Bush administrations. The Dems were every bit as guilty. Llyod Bentson and the Clintons were neck-deep in it. Greed has no loyalty to parties.
Long story short: In the mid-70s, a senator named Jake Garn was able to get some very specific banking regulations lifted, and the crooks went nuts. For 10 straight years, they looted Savings and Loans across America. The state of Texas was the worst. The bad guys crashed 137 Texas S&Ls, stealing over $3 billion. In Arizona, a banker named James Fail (he didn’t fail here) put up just $1000.00 of his money to buy 15 troubled S&Ls. He then requested $1.2 billion in government relief. You guessed it! The federal govt gave him the money. A banker in Utah bought a S&L, and that same week, he paid himself $50 million dollars for a piece of land he owned. The land appraised at $850,000. This isn’t a joke! That’s how lax the regulations were. Convicted felons and their pals were buying S&Ls all across America.
(I wonder if any of these guys are doing the hedge fund thing now?)
As an American citizen and taxpayer, I guess I was too naïve, and too trusting of our government to think this couldn’t happen again. It looks like the NSS debacle is going to be even bigger. The SEC is in a lose-lose situation, and that’s right where they deserve to be. If they admit to any complicity in the NSS, they admit their own guilt. If they say they weren’t aware, they are admitting gross, gross, gross incompetence. IMO, there are going to be too many angry people this time around, screaming “It’s happening again!” The regulators turned a blind eye, and let the crooks do it all over again.
BTW, the clean-up for the S&L failures was originally estimated to take 8-10 years, with a cost to the taxpayers of just under $100 billion. The GAO(general accounting office) says the bailout is still going on! The tab, including interest, is now thought to be at $450 billion.
