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A JOURNALIST RECOUNTS THE HISTORY OF THE SAVINGS AND LOAN CRISIS,
This review is from: S & L Hell: The People and the Politics Behind the $1 Trillion Savings and Loan Scandal (Paperback)
In her Introduction to this 1993 book, Kathleen Day (a reporter for the Washington Post) said, "The savings and loan debacle is the costliest scandal in the country's history. Bailing out the S&L industry will cost taxpayers at least $500 billion over the next few years and more than $1 trillion over the next several decades... this book doesn't advance a grand theory. Inistead it tells the history of the scandal through the stories of the principal players."
She wrote, "Hundreds of unhealthy S&Ls created what bankers likened to a cancer. Bankers argued that sick thrifts undermined the strength of healthy financial institutions on two fronts. Ailing S&Ls eroded public confidence ... and they sparked unfair, cutthroat competition by offering higher than market rates to lure deposits that they could sink into risky but potentially high-yielding investments they hoped would let them outgrow their problems." (Pg. 229)
Lawmakers faulted the new chairman of the Federal Home Loan Bank Board, arguing that he "failed to sound the alarm when the industry was being consumed." (Pg. 334) After President Bush had unveiled his bailout plan, "the Treasury official in charge of the cleanup... (tried) to convince reporters not to call the administration's program a bailout. He and his colleagues favored the term 'cleanup.' The money... was not going to bail out shareholders, who generally lost everything when the thrifts failed, but to depositors." (Pg. 375)
Day summarizes, "Regulators estimate that fraud played some role in 75 percent of the thrifts that failed. But economists argue that ... there was at least as much simple incompetence by thrift managers who plunged institutions into risky business they knew little about." (Pg. 387)
This is one of the best books written on the savings and loan crisis.