(11 am. – promoted by ek hornbeck)
The public amnesia that passes for normality in our Matrix-like world of perfected broadcast propaganda has wiped away most memories of the S&L Crisis, but let us dip into the magical restorative well of Wikipedia to remember:
An indication of this scandal’s size, Martin Mayer wrote at the time, “The theft from the taxpayer by the community that fattened on the growth of the savings and loan (S&L) industry in the 1980s is the worst public scandal in American history. Teapot Dome in the Harding administration and the Credit Mobilier in the times of Ulysses S. Grant have been taken as the ultimate horror stories of capitalist democracy gone to seed. Measuring by money, [or] by the misallocation of national resources…the S&L outrage makes Teapot Dome and Credit Mobilier seem minor episodes.” [15]
John Kenneth Galbraith called it “the largest and costliest venture in public misfeasance, malfeasance and larceny of all time.”
The U.S. government ultimately appropriated 105 billion dollars to resolve the crisis. After banks repaid loans through various procedures, there was a net loss to taxpayers of approximately $124 billion dollars by the end of 1999.[16]
The concomitant slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990-1991 economic recession. Between 1986 and 1991, the number of new homes constructed dropped from 1.8 to 1 million, the lowest rate since World War II. [2]
Some commentators believe that a taxpayer-funded government bailout related to mortgages during the savings and loan crisis may have created a moral hazard and acted as encouragement to lenders to make similar higher risk loans during the 2007 subprime mortgage financial crisis.[17]
SOURCE: http://en.wikipedia.org/wiki/S…
Look around at the characteristics of the current financial meltdown: unchecked greed in the financial sector; removal of regulatory restraints by corrupt legislators; taxpayers filling the pockets of predators to “preserve” the financial system. We have been here before. The only difference is the number of decimal places. This financial crisis is 20 times bigger than the last one.
The S&L Crisis did not happen in the distant past. The Resolution Trust Corporation began pumping taxpayer money into the failed S&Ls, many simply looted by their crooked proprietors, in 1989. That was 20 years ago, and now we are seeing a reprise of that disaster that is 20 times worse.
Just what are we preserving here? It appears that we are preserving a system of financial predation that generates crises resembling a series of increasingly severe Heroin overdoses, a series that will eventually kill us. The same mechanisms that undermined financial equilibrium under Reagan undermined financial equilibrium under Bush, and these mechanisms of corruption will do the same thing after the present crisis has passed. If we are lucky, our society will ride out the current financial disaster. But will we survive the next one?
Change or die is the fundamental dictum of evolution. America’s coin-operated system of politics ensures that wealthy financiers will repeatedly be able to remove or disable financial regulatory mechanisms. Thus, the next financial meltdown is inevitable unless we break the connection between concentrated wealth and political power in the United States. If we do not make radical changes in the control of financial markets, this pattern of increasingly severe economic disruptions is likely to destroy our society. Our next deja vu episode may be our last.
3 comments
Lincoln Savings and Loan, Charles Keating, the Keating Five, Silverado and Neal Bush, spawn of GHW Bush and the Barbara-thing, real estate bubble, massive deregulation, no oversight and a southern and southwestern based old style roll into town and empty out the banks and ride off into the sunset. No one does any time and the bad guys get to keep all the loot.
What else is new. Those who don’t remember history are doomed to repeat it.
If you think this is bad, watch what happens if the almost completed fascist putsch under W is allowed to remain under its rock. History that sees the light of day always gets repeated.