I recently returned from a trip to the Phoenix area. Along the side of the highway, I could see the skeletons of unfinished apartment complexes. There were no workers at that time of day; they may have just gone home for the day, or they might not be working that hard on them at the moment. The scene reminded me of one described in, “Inside Job”.
The camera panned slowly from side to side, catching in sickening detail the carrion of dead savings and loan deals…
The condominiums stretched as far as the camera could see, in two- and three- floor clusters, maybe 15 units per building. They were separated by stretches of arid, flat land. Many were only half-finished shells.
It goes on to describe rotting materials – a $300 million gutting of Empire Savings and Loan. Land was flipped between several people to inflate the value and then mortgage it, and then to walk away from it, leaving the S&L and eventually the American people holding the bag.
President Ronald Reagan stepped through the tall French doors of the White Hours Oval Office in to the bright sunlight of a lovely fall morning…
…Reagan told the audience of savings and loan executives, bankers, members of Congress, and journalists that they were there to take a major step toward the deregulation of America’s financial institutions…
…The result was the biggest financial disaster since the Great Depression and the biggest heist in history.
Reagan took his pen, deftly jabbing it into the heart of the Savings & Loan industry. Even though the hemorrhage pooled around his feet making his shoes sticky with each step, the writhing death rattle was ignored until after daddy Bush was elected president. Daddy removed the saber from the chest of the gasping FSLIC (Federal Savings and Loan Insurance Corporation) and lopped off its head, pausing only long enough to call in the grim reaper known as the Resolution Trust Corporation.
While Reagan moved too slowly to save the S&Ls, daddy and RTC moved quickly to finish them. Instead of admitting them to the ER, they were rushed off to the undertaker as they gasped their last breaths; institutions were taken over and their assets sold for ten cents on the dollar.
We may be heading to something similar – a perfect storm of credit – under Dubya. There have been tons of laws, court rulings, and a lase faire attitude toward what companies are doing to individuals.1
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