Banking System Rotten to the Core | William K Black PhD | FINANCIAL SENSE
I told you I would bring you a message of hope. I will disagree a little bit with a fact pattern about the Reagan administration and re-regulation on Savings and Loans, because that's where I was. I will tell you this: everyone opposed our re-regulation of the industry. The big deregulation bill, the equivalent of the repeal of Glass-Steagall and such, occurred in 1982 and became effective in 1983. By November 1983, we were already re-regulating the Savings and Loan industry. And we were called re-regulators because that was the greatest swear word the Reagan administration believed existed--to call people re-regulators. But this was not partisan--a majority of the members of the House at the time it was controlled by Democrats co-sponsored a resolution saying do not go forward with re-regulation. Five US Senators who became known as the Keating 5 because the most infamous fraud of that era got them together--and who, by the way, did Charles Keating and that fraud use to recruit the Keating 5? Brought him as a lobbyist to walk the halls of the Senate--a guy named Alan Greenspan. Who also put in writing Lincoln Savings posed no foreseeable risk of loss. It was only the most expensive failure--a 3000 position error. And after he got everything wrong in the most important issues he had ever dealt with, after that fact we named him Chairman of the Federal Reserve because we promote incompetence if it helps the 1%. The Reagan administration was so outraged that we were closing insolvent Savings and Loans with great political support that the Office of Management and Budget threatened to file a criminal referral against the head of our agency on the grounds that he was closing too many insolvent banks. Do we have that problem recently? You see Geithner out trying to close the big powerful banks? And that Reagan administration tried to appoint two members--there were only three members running the place--so this would've given control to Charles Keating, the most notorious fraudster in the Savings and Loans crisis, who selected two individuals to run the agency that would then not regulate him. One of them got knocked out on ambiguous political grounds and the other I had to blow the whistle to get him to resign in disgrace, but of course they didn't prosecute him. We can prosecute these frauds.
I told you I would bring you a message of hope. I will disagree a little bit with a fact pattern about the Reagan administration and re-regulation on Savings and Loans, because that's where I was. I will tell you this: everyone opposed our re-regulation of the industry. The big deregulation bill, the equivalent of the repeal of Glass-Steagall and such, occurred in 1982 and became effective in 1983. By November 1983, we were already re-regulating the Savings and Loan industry. And we were called re-regulators because that was the greatest swear word the Reagan administration believed existed--to call people re-regulators. But this was not partisan--a majority of the members of the House at the time it was controlled by Democrats co-sponsored a resolution saying do not go forward with re-regulation.
Five US Senators who became known as the Keating 5 because the most infamous fraud of that era got them together--and who, by the way, did Charles Keating and that fraud use to recruit the Keating 5? Brought him as a lobbyist to walk the halls of the Senate--a guy named Alan Greenspan. Who also put in writing Lincoln Savings posed no foreseeable risk of loss. It was only the most expensive failure--a 3000 position error. And after he got everything wrong in the most important issues he had ever dealt with, after that fact we named him Chairman of the Federal Reserve because we promote incompetence if it helps the 1%.
The Reagan administration was so outraged that we were closing insolvent Savings and Loans with great political support that the Office of Management and Budget threatened to file a criminal referral against the head of our agency on the grounds that he was closing too many insolvent banks. Do we have that problem recently? You see Geithner out trying to close the big powerful banks? And that Reagan administration tried to appoint two members--there were only three members running the place--so this would've given control to Charles Keating, the most notorious fraudster in the Savings and Loans crisis, who selected two individuals to run the agency that would then not regulate him. One of them got knocked out on ambiguous political grounds and the other I had to blow the whistle to get him to resign in disgrace, but of course they didn't prosecute him.
We can prosecute these frauds.
So deregulation caused the crisis, re-regulation is necessary and prosecution of fraud is part of re-regulation, but it is a constant battle.
I don't see a description of old fashioned righteous regulation. I see a claim that prosecution is a necessary part of re-regulation, then and now. There may or may not be an assumption of pre-80ies old fashioned righteous regulation underpinning his worldview. A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
