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					                       THE GREATEST-EVER BANK ROBBERY



       This book explains the collapse of the Savings and Loan Industry which as the

author explained in detailed was caused by the conspiracy of accountants, law firms,

government policies, politicians and the unstable market. The author explains that the

S&L disaster happened when energy prices fell and therefore brought down the value of

real estate. The most affected states were Arizona, California, Illinois and Florida.

       In order to fix this collapse, the government made a mistake trying to regulate the

market. Conflict of interest was a major issue in the S&L as their board was joined by all

of the persons that formed a transaction, who will manipulate for each of their own

benefit; they had the builder, the appraiser, the broker, the lawyer, the title insurance

company, the casualty insurance company, the accountant and they even had someone

from the dominant political party and from the church. Like the author describes an

institution that is formed with all the beneficiaries involved is easy to say that “they were

not subject to discipline from the market of from the government” with a board like that it

was easy to create the shape of the legislation concerning federal insurance of accounts at

saving and loans associations. The Congress was also part of this conspiracy and

corruption played a big role in this industry.

       The industry fell because the S&L had no other option than to raise interest rates

and inflation affected bankers who borrowed for short periods of time and lent the money

for long periods. Policies and regulations changed and were intended to help the market

but instead brought it down like the state legislature that indicated that mortgages were
loans to the property and not to the individual which did not help because it meant that

payments of the property were to the seller of the property instead of the S&L.

       The fact that all the main characters were involved in the same industry made it

much easier for each of them to take advantage, I like the metaphoric quote Mayer used

“Look, when you get a fox in a henhouse, you get a lot of dead chickens. That doesn’t

mean that’s a bad fox. That’s what a fox will do in a henhouse…” Mayer mentioned Dick

Pratt as one of the main protagonist of the disaster; it was President Reagan who

nominated him to be chairman of the Bank Board, him and other chairmen of the Board

adjusted the system in their own most convenient way to benefit whoever was needed to

continue filling up their own pockets.

       With all these legislatures and reforms the most damaged were the people as $200

billion were taken from the taxpayers. Small banks and other companies although they

went bankrupted did not suffer from these incidents, the law helped them write off

anything that was needed and use the insurances however they wanted so their personal

“assets” will not be affected. The ones who benefit the most were the board members,

corrupted politicians and anyone who collaborate after receiving compensation for their

“services”. The way everyone benefited was not just a change of money used, mansions,

luxurious “gifts” and extremely big sums of money were given out to all the people who

participated in this massive robbery.

       Justice was not entirely made after all this happened they were some law firms

like Jenkens & Gilchristin in Dallas or Comisky & McCauley lost reputation but some of

the ones who participated were not affected at all. Also directors who abused their

position and their institutions were convicted and it is almost entertaining to find out that
their defense claimed “that the way you do business in America”. The juries had some

trouble understanding the most sophisticated transactions, and after five thousand

criminal referrals only a few hundred will lead to punishment. For the Texas Scandal the

Justice Department of Texas team has gained forty-seven convictions (January, 1990) and

most of them were for transactions related to taking kickbacks, forging records, paying

company money for prostitution. Some entities were punished and after reviews of the

work supposedly done by accountants on the financial books of these institutions they

realized that they were not honest and important transactions were approved without

overlooking the real numbers.

       The massive collapse of the industry involved so many people that not even the

public wanted to know about this issue, the media reported little information and the

people in the country was not involved. Not being involved makes the public

responsible? I think is some way it does, this is a democracy and by that the public has to

rule what is done in the economy of the country. If the public would have been more

involved they would have been able to choose better leaders and if they would have

protested it would probably stopped the disaster at some point.

       They were some provisions that were taken in effect after what happened that

could have prevented the collapse. “Men of substance will no longer be willing to serve

as directors of S&L; accounting firms won’t audit S&L books; lawyers will be unwilling

to represent thrift institutions”. Also another proposal is to demand owners of insured

institutions to put much more capital, adopting accounting rules that could manifest a

more real picture of the institution’s condition. Transparency from the institution’s

transactions and well regulated policies and auditors are important to avoid corruption.

				
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