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Previously published on Krebscycle.

''All in all I think we hit the jackpot.'' Ronald Reagan in the Rose Garden after signing the bill deregulating Thrifts and Savings and Loans



If you go back to the savings and loan debacle, we got more than a thousand felony convictions of the elite. These are not, you know, tellers or something.

Bill Black to Bill Moyers



Sen. Alan J. Dixon (D-Ill.), joining several Democratic senators in proposing a special strike force last week, said: "This country is being robbed blind, and the crooks are getting away scot-free."[...]

S&L fraud cases "are hard cases to make," said Douglas Tillett, the Justice Department spokesman. "We have to bring evidence and prove guilt--members of Congress can hold a press conference and not be accountable for their grand ideas."

LA Times June 1990

and also


WASHINGTON — The Justice Department has not given the investigation and prosecution of fraud in the multibillion-dollar savings and loan scandal the priority the public demands, a House panel concluded in a report released Sunday. [..]

In addition, the report said, the department has failed to address issues that have hampered investigation and prosecution of savings and loan fraud, such as the FBI's lack of document subpoena authority and inadequate pay for FBI agents and for prosecutors. [...]

The cases, like other fraud committed by white-collar criminals, are difficult to prosecute. The crimes are intricate, the perpetrators often well-known, once-respected members of the business community.

There seems scant opportunity to recover much of the billions of dollars in losses suffered by S&Ls, federal officials believe. They feel that the money has melted away along with the collapse of real estate values in many markets

LA Times November 1990

Well that was during the Bush years, how about during Clinton:

Justice data showed that since the beginning of fiscal year 1989, Justice charged 494 individuals (164 insiders) with some form of criminal misconduct in 304 cases associated with 171 RTC thrifts (23.7 percent of the 723 RTC thrifts).


Justice defined an “insider” as any former thrift chairman, chief executive officer, major shareholder,
director, officer, president, vice president, attorney, or branch manager.

GAO Report August 1993

Insiders - those branch managers and officers and vice presidents of huge powerful institutions, no doubt. Like:

Otha B. Chandler Jr. 50, a senior loan officer at Savers Federal in Little Rock, Arkansas. 

Janis Lee 42, a clerk in charge of handling new customer accounts at Surety Federal Savings Bank in Vallejo, California, skimmed some $100,000 for herself from dormant accounts.

Luann Price Brent Price Luann, 42, a loan officer at Eureka Federal S&L in Eureka, California, and her husband, Brent.

Roderick D. Reed 42, president of FirstSouth Savings in Pine Bluff, Arkansas.

Robert Mikkelsen 53, executive vice president of Baldwin County S&L in Robertsdale, Alabama, pushed through a $1.5 million loan for three business associates, supposedly to develop a marina on a piece of swamp known as the Quarantine Property. 

Stephen Croff 42, chief loan officer at Gold River Savings in Carmichael, California, invented four fictitious borrowers and lent himself $198,000 to open a pizza parlor. 

Ronald Jacoby Simon Abelson Daniel Jessup Jacoby, 47, a former S&L president, Abelson, 33, and Jessup, 39, set up a straw mortgage scheme to get loans for condominiums from First Federal Savings and Loan Bank of Newton, Kansas

(All the material in italics above are quotes from a great article that appeared in Fortune in 1990)

Globally powerful banking titans, like the Vice President of Baldwin County S&L in downtown Robertsdale Alabama!

  One of the most successful prosecutions of one of the biggest crooks was of a guy named Don Dixon (the New York Time headline writers and journalists were obviously cracking themselves up about this story of hicks who hit that jackpot President Reagan mentioned). Don was the CEO of Vernon S&L, Vernon Texas - known a Vermin TX to some of the reporters who covered the story. Vernon  being the capital of Wilbarger County and - as everyone knows - the  financial center  of the North Wichita Falls Metropolex. Dixon actually stole a lot of money, but was this guy in the power elite?

There were some really connected people who got caught up in the unbreakable net of the implacable and righteous prosecutors.

The US Office of Thrift Supervision investigated Silverado's failure and determined that Bush had engaged in numerous "breaches of his fiduciary duties involving multiple conflicts of interest." Although Bush was not indicted on criminal charges, a civil action was brought against him and the other Silverado directors by the Federal Deposit Insurance Corporation; it was eventually settled out of court, with Bush paying $50,000 as part of the settlement.

A friend who also donated funds to the Republican set up a fund to help defer costs Neil incurred in his S&L legal defense[ Wikipedia]

And his partners too:

NEWPORT BEACH — Developer Bill L. Walters, who told a congressional committee in June that he was broke after defaulting on nearly $100 million in loans obtained from a Denver thrift with the help of Neil Bush, is now living in the lap of luxury here.

In February, a trust for Walters' wife, Jacqueline, bought a $1.9-million gated estate near Newport Bay, according to county records reviewed by The Times. State records also show that his wife's trust bought a mobile home on prime oceanfront property just northwest of Laguna Beach for $250,000.[...]

Walters is a one-time business associate of Bush, a son of President Bush. The activities of Neil Bush, Walters and Kenneth Good, another business partner of Bush, have become the focal point of federal investigations into the failure of Silverado Banking, Savings & Loan Assn. in Denver.

LA Times July 1990

but justice prevailed in the end

SANTA ANA — Dealing a blow to federal banking and thrift regulators, a bankruptcy judge has ruled that the government failed to prove that former developer Bill L. Walters hid millions of dollars in assets from creditors and intentionally lied about his earnings.

The long-awaited decision, released Friday, all but clears the way for Walters to be freed from as much as $220 million in debts while he continues to live in luxury in a rented beachfront home in the Emerald Bay area of Laguna Beach and reportedly jets to Europe to consult with bankers and investors.


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Comment Preferences

  •  Your embrace of the status quo is duly noted n/t (3+ / 0-)

    "George RR Martin is not your bitch" ~~ Neil Gaiman

    by tardis10 on Sat Jan 26, 2013 at 08:43:40 AM PST

    •  I don't understand. Seems to me he's debunking (4+ / 0-)

      the weird claim that

      If you go back to the savings and loan debacle, we got more than a thousand felony convictions of the elite. These are not, you know, tellers or something.
      (or were you joking?)
      •  The diarist's purpose, imo (2+ / 0-)
        Recommended by:
        6412093, nuclear winter solstice

        is to say that the S&L prosecutions netted no big fish so you can't expect this admin. to do so. Status Quo.

        As for that "weird claim",the diarist disingenuously unembiggened some to make his point. Don Dixon wasn't just some 'lil ole S&L manager from Vernon,Tx nor was Sunbelt Savings just about gurus.

        Personally,I don't think TBTF or TBTJ is A-OK. But I'm kinda old-fashioned like that.

        "George RR Martin is not your bitch" ~~ Neil Gaiman

        by tardis10 on Sat Jan 26, 2013 at 09:20:52 AM PST

        [ Parent ]

        •  no (1+ / 0-)
          Recommended by:

          my purpose is to debunk Black's self-promotion and right wing political idea that in the virtuous past justice prevailed.

          self-appointed intellectual cop

          by citizen k on Sat Jan 26, 2013 at 09:30:26 AM PST

          [ Parent ]

          •  So now Bill Black has embraced (3+ / 0-)

            the right wing? A few diaries ago it was some other left-ish economist. Could you make it HA-JOON CHANG next time. He doesn't get enough love. Extra points if you work in Eno.
            On a serious (& selfish) note. These are not good times for many. You have expertise and ideas that could help. Why not share it?

            "George RR Martin is not your bitch" ~~ Neil Gaiman

            by tardis10 on Sat Jan 26, 2013 at 09:42:01 AM PST

            [ Parent ]

            •  Yes it's right wing to push the Bush admin (0+ / 0-)

              as an exemplar of moral values.  Libertarian fairy tales about how Capitalism used to be so moral in the good old days are right wing.  

              H-joon chang is not in the same ballpark as Black. He's a very smart guy and pretty illuminating.

              self-appointed intellectual cop

              by citizen k on Sat Jan 26, 2013 at 12:36:00 PM PST

              [ Parent ]

          •  It would be more believa if in addition to ... (4+ / 0-)

            ...yoiur smears of Black (a wonderful coda to your red-baiting at other times), you would actually endorse the prosecution of big wigs instead of turning it's-too-hard into a mantra for do-nothingism.

            Don't tell me what you believe, show me what you do and I will tell you what you believe.

            by Meteor Blades on Sat Jan 26, 2013 at 12:38:48 PM PST

            [ Parent ]

            •  What it is, and what it should be are (0+ / 0-)

              different things. One might be incensed that Capitalism always privileges the rich or one might think it's grand. But to  pretend that at one time it used to be a just system with a single rule of law for rich and poor is to embrace a lie.  And that lie is a right wing lie, a nostalgia for some good old days that were not so damn good.

              As for whether I approve, I do not. If I could put Dick Fuld on a chain gang, I would.  However I am not sure he actually broke any laws because the laws are written and interpreted by Judges to unfairly privilege the rich and powerful - see above.  I think that people who call for prosecutions are naive about how US criminal law is written and applied -  very conveniently for themselves.  It turns out, that it is illegal for a poor kid to steal a loaf of bread but perfectly legal for Mitt Romney to empty the pension savings of thousands of old people.  It even turns out that middle class people, men, and white people also have actual unfair advantages under criminal law.  To me, the political point of view that begins by denying those truths is inherently immoral and right wing.

              Feel free to differ.

              self-appointed intellectual cop

              by citizen k on Sat Jan 26, 2013 at 12:54:57 PM PST

              [ Parent ]

              •  Let me recommend (unsolicited, of course)... (2+ / 0-)
                Recommended by:
                Free Jazz at High Noon, tardis10

                ...that you introduce future diaries on the subject with something along the lines of the first 13 of this paragraph. Because, frankly, far too much of your commentary belies what you're saying in this comment. In my opinion. Then, at least, when you say Obama shouldn't be criticized for doing things any differently than his predecessors in such matters won't have such a hollow sound.

                Don't tell me what you believe, show me what you do and I will tell you what you believe.

                by Meteor Blades on Sat Jan 26, 2013 at 01:00:51 PM PST

                [ Parent ]

                •  it's interesting that in some places (0+ / 0-)

                  people don't need that kind of introduction. The self-healing narrative in which most DK ranting takes place is resistant to any point of view not already conveniently labeled and categorized.

                  self-appointed intellectual cop

                  by citizen k on Sat Jan 26, 2013 at 01:24:05 PM PST

                  [ Parent ]

        •  but it's true, in today's world Silverado is only (1+ / 0-)
          Recommended by:

          a big fish fantasy.

  •  How times have changed!! (2+ / 0-)

    The roots of the S+L crisis lay in the deregulatory measures passed during the Reagan administration.  The GHW Bush administration lead the way in prosecuting the bank fraud perpetrated by Saving and Loan bank officers

    The roots of the current banking crisis lay in the deregulatory measures passed during the Clinton administration.  The Obama administration has seen fit to absolve all bank officials of any wrong-doings regarding banking and investment crimes.  

    "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

    by Hugh Jim Bissell on Sat Jan 26, 2013 at 08:57:41 AM PST

    •  one of the things I love about DailyKos (2+ / 0-)
      Recommended by:
      MrAnon, virginislandsguy

      is the careful reading and thinking. People here are not content to recite narrative points reflexively without some reflection, debate, and deep analysis.

      self-appointed intellectual cop

      by citizen k on Sat Jan 26, 2013 at 09:00:12 AM PST

      [ Parent ]

      •  As deep as your analysis (2+ / 0-)

        of Don Dixon? Who I think you know was not quite so small time as you purport above.
        But in the end,what does it matter? As Mark Twain & countless others have said:"We have the best government money can buy." Pity the fools that work to change it.

        "George RR Martin is not your bitch" ~~ Neil Gaiman

        by tardis10 on Sat Jan 26, 2013 at 09:08:05 AM PST

        [ Parent ]

      •  The historical record is clear (0+ / 0-)

        The GHW Bush did much to close and resolve insolvent S+L, and prosecute bank crimes by S+L bank officers.  It is true that members of the Bush family were found to have been profitably involved in S+L fraud, and held to account.

        Sadly, The Obama administration has done nothing to prosecute bank fraud in the wake of the 2008 bank crisis.  So we will never know if any members of Obama's family or staff made profits from bank fraud.  Perhaps that is why the Obama administration has been so shy about prosecuting bank fraud.

        "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

        by Hugh Jim Bissell on Sat Jan 26, 2013 at 09:26:56 AM PST

        [ Parent ]

        •  well (0+ / 0-)

          You disagree with the Congressional committees cited in the 2 LA Times articles and the GAO report. But I'm sure you have evidence.

          self-appointed intellectual cop

          by citizen k on Sat Jan 26, 2013 at 09:31:27 AM PST

          [ Parent ]

          •  So is it your claim that the Bush admin (0+ / 0-)

            So is it your claim that the GHW Bush administration did not preside over the operation of the Office of Thrift Supervision, and that no S+L officers were prosecuted by that administration, while the Obama administration has launched prosecutions against a multitude of bank officials?

            See, there is never an intellectual cop around when you need one!!

            "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

            by Hugh Jim Bissell on Sat Jan 26, 2013 at 10:04:01 AM PST

            [ Parent ]

            •  my claim is that most of the S&L prosecution (0+ / 0-)

              was against small timers.

              That's why the Democrats in Congress in 1990 held hearings on the bullshit job the Bush Administration had done.

              self-appointed intellectual cop

              by citizen k on Sat Jan 26, 2013 at 12:39:09 PM PST

              [ Parent ]

              •  Bush did a better job than Obama (1+ / 0-)
                Recommended by:
                nuclear winter solstice

                For all your complans about the GHW Bush administration's handling of the S+L crisis, it is still clear that the Bush administration did more to prosecute bank fraud than has the Obama administration.

                Where is the congressional investigation on the bullshit job the Obama administration is doing?

                See that: there is never an intellectual cop around when you need one!!!

                "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

                by Hugh Jim Bissell on Sat Jan 26, 2013 at 12:46:01 PM PST

                [ Parent ]

                •  no it's not clear at all (0+ / 0-)

                  The same kind of regional and small time bank fraud prosecute by Bush was and is prosecuted by Obama. Take a look at DOJ press releases on convictions. You should take a look at how Bush's DOJ prosecuted the CEO of Continental Illinois- not at all. The S&L crisis took place in a thousand regional and community banks, the 2008 crisis was at the heart of power.

                  self-appointed intellectual cop

                  by citizen k on Sat Jan 26, 2013 at 12:58:48 PM PST

                  [ Parent ]

  •  And no mention (0+ / 0-)

    of the small timer Jim McDougal who took the Clintons for $50k.

    Only two people profited from McDougal's S&L - Sheffield Nelson (the Whitewater "whistleblower") and Jerry Jones. Yeah, that Jerry Jones, buider of Jerryworld in Arlington, TX and  someone who thinks he knows better than Jimmy Johnson on how to put together a football team.

    •  just as a story, the S&Ls were better than 2007 (4+ / 0-)

      many more weird and flamboyant characters.  And they went on to such careers. Who could forget Neil Bush later telling his wife's divorce attorney in court that he had no idea those women who showed up at his hotel room in Thailand to have sex with him could have been prostitutes? Or how Fast Eddie would be back pulling another huge scam or Lance Ito's botching of Keating's trial as a prelude to the OJ trial?

      self-appointed intellectual cop

      by citizen k on Sat Jan 26, 2013 at 09:25:36 AM PST

      [ Parent ]

  •  Once again, a remarkable rationalization (0+ / 0-)

    for why we should settle for a shit sandwich.  How would we get by without you?

    Humans shouldn't be disarmed, for the same reason that cats shouldn't be declawed.

    by happymisanthropy on Sat Jan 26, 2013 at 09:35:08 AM PST

    •  rather, I am pointing out that shop only serves (1+ / 0-)
      Recommended by:
      nuclear winter solstice

      shit sandwiches, no matter whether that makes you happy or sad, and that the people telling you it used to serve delicious fresh food yesterday are not telling you the truth. You have to find another source of food or change the basic operation of the shop if you prefer something better. And whining is not going to get you there.

      self-appointed intellectual cop

      by citizen k on Sat Jan 26, 2013 at 01:05:19 PM PST

      [ Parent ]

  •  I think this is a good reminder. (1+ / 0-)
    Recommended by:

    Financial institutions must be regulated and policed assiduously.
    Not all crooks are super rich.
    You can steal more money from more people with a pen than you can with a shotgun.
    Barbara and GHB were not suited to parenthood.
    Americans are suckers.  Sort of Charley Brown types.

    As I recall several congress critters escaped Scot free for aiding and abetting the crooks.  Conclusion: Don't expect congress to care for honesty, honor, or the reputation of their institution when a profit is to be made.

    .... add your lessons too

  •  I don't think Justice has pressed hard enough (3+ / 0-)
    Recommended by:
    citizen k, Meteor Blades, Eric Nelson

    to go after Wall Street execs, but less out of fealty to Wall Street and more due to timidity and fear of losing cases.  However, I think some folks who are justifiably outraged at Wall Street tend to think that prosecuting the Big Boys is relatively easy, thus the only reason they haven't been put away is due to corrupt and co-opted government officials.  Not ruling out the possibility of such corruption, but the fact is there isn't much precedent in our history that I can see of top Wall Street execs ever going to the slammer.  The scandals of the 1980s nailed Milliken and Keating, but they were not on the level of a Blankfein or Dimon or even a John Paulson.

    Or look at the most analogous financial and economic crash in history to that of our own, namely the crash of the late 1920s and early 1930s, which caused the Depression.  For all the shenanigans that were perpetrated by the titans of Wall Street, as exposed in such lurid detail by the famed Pecora Investigation, none of the Big Boys ever went to prison for their misdeeds.  Charles Mitchell of National City Bank (now Citibank), the most prominent villain in the Pecora hearings, was eventually tried in 1934 - but on tax evasion, not for anything related to the sort of fraud he perpetrated that led to the financial crash.  And Mitchell was acquitted.  Richard Whitney, head of the NY Stock Exchange, was tried (and convicted) in 1936 but for cheating his associated to cover his own private financial losses, not for any role in perpetrating the crash.

    The only "Fat Cat" ever prosecuted was utilities holding company magnate Samuel Insull, who was neither a banker nor from any of the big Wall Street firms.  Insull wasn't charged until he'd already fled the country, and when he finally did return to face trial he was acquitted.  Other than that, no one at the center of the financial misdeeds that led to the Depression were prosecuted - the big wigs at the House of Morgan, National City Bank, Chase Manhattan, they all got off scot-free.  All under the administration of the scourge of all moneychangers, the liberal lion FDR.

    Not that we shouldn't try to go after these guys today, but something tells me that Fat Cats of the past and present take great care to insulate themselves from direct implication in potential financial crimes, and this no doubt makes it especially difficult to prosecute them.  This is likely as strong a reason for why these Wall Street titans always seem to get off as it is due to politicians and officials, whether they be FDR or Obama, who have made some corrupt pact with those titans.  More likely it's timidity and fear of shooting for the Big Boys - and missing.

    Nevertheless, I do believe a public exposé along the lines of a Pecora Investigation, and at least some very public attempts to try and go after Wall Street are necessary for the public to feel that government is trying to see justice done, and so the Masters of the Universe are at the very least made to have a day in court and know they are not going to get away without even being so much as inconvenienced.

    “Th’ noise ye hear is not th’ first gun iv a revolution. It’s on’y th’ people iv the United States batin’ a carpet.” - Mr. Dooley

    by puakev on Sat Jan 26, 2013 at 11:03:25 AM PST

    •  The difference between what you're saying... (2+ / 0-)
      Recommended by:
      puakev, Eric Nelson

      ...and what the diarist is saying is writ large in that final paragraph.

      Don't tell me what you believe, show me what you do and I will tell you what you believe.

      by Meteor Blades on Sat Jan 26, 2013 at 12:42:17 PM PST

      [ Parent ]

      •  agreed (0+ / 0-)

        I think the Pecorra commission sold a false story about how some bad people abused a fair system. Furthermore, I have been persuaded by the most successful Democratic politician of the last 50 years that the political tactic of attempting to ride populist anger only works for the right in the current era - and I found that a very uncomfortable lesson to learn. 20 years ago I cheered for Chomsky, Kucinich, and Cornel West - who  I thought were brave political truthtellers. Now I think they were selling self-righteous political indignation as a kind of theater  while the far right was steadily building political power and that the second two turned out to be self-promoting charlatans taking advantage of suckers like me.

        If you want justice, you have an obligation to find methods that have some chance of working.

        self-appointed intellectual cop

        by citizen k on Sat Jan 26, 2013 at 01:20:30 PM PST

        [ Parent ]

  •  Silverado Savings And Loan (0+ / 0-)

    Remeber that fine institution?  Remember who took $830 Million out of it?  Earl Bush -- George Waste Bush's older brother.  Pity, really, since the Saudi prince already owned the Bush family (Carlisle).

  •  On a tangent: What do you think of Pres. Obamas.. (0+ / 0-)

    ..choice: Mary Jo White to head the Securities and Exchange Commission.

    White’s client list includes former Bank of America head Ken Lewis, the board of Morgan Stanley, and the firm JPMorgan Chase.
    Do you think this experience will work in favor of or help to rein in high finance where necessary?

    Thx citizen k
    Democracy Now - January 25, 2013

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