Page 2


ANDERSON & COMPANY COFFEE TEA SPICES TWO JEFFERSON SQUARE AUSTIN, TEXAS 78731 512 453-1533 Send me your list. Name Street City Zip MOLLY IVINS Austin Ilike the stink about President Clinton’s Whitewater deal. More, more! Throw us back into that brier patch. Yessss! One of the greatest frustrations of my life was the savings-and-loan scandal sittin’ there in Dallas in the heart of the Inferno, damn thing raging out of control all around us, and we couldn’t get anyone to pay attention! I know some Dallas journalists who say they twigged as early as 1983 or ’84. It took me until ’85 to see it, and by then, it was just a monster; ’86, ’87, some stories in the financial press, and the few early and lonely regulators who knew how bad it was were getting more and more desperate. No one wanted to hear anything about it. Congress dithered. No one in Washington wanted to talk about it because they were all culpable. 1988, we all thought desperately, it’s got to be the biggest issue in the ’88 campaign. And the ‘ 88 campaign turned out to be the most vacuous political exercise in living memory, pivoting on such issues as the flag and Willie Horton, while the bailout bill grew to half a trillion dollars. When ’88 finally wended to its dreary close, Washington at last turned to the S&L mess, metaphorically putting-hand-to-forehead-to-shadeeyes while saying, “What, ho. I think I see some smoke from down there in Texas.” By then, we were sittin’ down here pickin’ through the cold briquettes. Sure, we stole the most here in Texas, but the S&L mess was born and raised in Washington, D.C. fathered and whelped there. And now, the very geeks who voted for the Garn-St. Germain bill, who ignored the consequences, who tried to pretend that the Keating Five were the only ones who ever used to stroke for an S&L \(Hello, Senator these very people are the ones who think President Clinton should be investigated because he was one of several zillion people who got an S&L loan for a real-estate scheme. Well, by all means, let’s just lay it all out there. Let’s go into full blame alert on this at last and find just who is responsible for saddling every man, woman and child in this country with $5,000 in debt because of the greed and stupidity of people in Washington. Let’s review those golden days of yesteryear when Ronald Reagan rode into town on a white horse and announced that government was not the solution, government was the Molly Ivins, a former Observer editor, is a columnist for the Fort Worth Star-Telegram. problem, and all we needed to do was deregulate so the magic of the marketplace could make us all happy and rich. Anyone here remember M. Danny Wall? Back in the early ’80s, M. Danny was the chief banking aide of Senator Jake Garn, Republican of Utah, chairman of the Senate Finance Committee. M. Danny was so close to the chief S&L lobbyists, Richard Hohlt and James “Snake” Freeman, that Hohlt’s telephone number was the first button on M. Danny’s speed-dial phone. M. Danny took all-expenses-paid junkets on the S&L lobby’s tab 30 in one year paid for by the S&Ls and other lobbies. M. Danny let Hohlt and Freeman write the Garn-St. Germain bill that deregulated the S&Ls. Now, follow this closely because it’s almost unbelievable. In those early years of the S&L scandal, there was one hero, Edwin J. Gray, a nice Reaganite S&L guy from California who had been named chairman of the Federal Home Loan Bank Board because he was supposed to be the puppet of the S&L lobby. By 1984, Gray realized that the ailing S&Ls were going to cost the Federal Savings and Loan Insurance Corp. so much money that the FSLIC would go broke. He pleaded with Congress; he called reporters obsessively. No one listened. The S&L lobby did everything it could to shut him up, including leaking to the press that Gray had been junketing across the country on the S&Ls’ tab. Now we’re into ’85, ’86; the cost of the bailout is growing by $1 billion a month. The people running the U.S. League of Savings mad to delay bailout legislation because they knew the cleanup costs would soon be so large the industry couldn’t afford to take care of them and the taxpayers would get the bill instead. In 1987, the league finally got rid of Gray and the Reagan Administration named his replacement: M. Danny Wall. And that’ s how the whole problem was hushed up for another two years, for an additional $20 billion to $30 billion in cleanup costs. As Kathleen Day wrote years ago in the New Republic, “Thrift executives, lobbyists, lawmakers and regulators were locked into a relationship so cozy it was hard to tell, and still is, where the industry ends and government begins.” As Curtis Lang wrote in Southern Exposure, “What resulted was a business culture in which fraud and collusion flourished and government deregulation essentially socialized losses and privatized profits for the politically well-connected.” It’s still not possible to get all the numbers, but we think there was $1 1 billion in fraud in Texas alone. The same day that Reagan signed the Garn-St. Germain bill, a group of speculators associated with the Bell Savings and Loan Association in Belton sat around a table and bought and sold three parcels of land over and over again. The parcels changed hands five times, netted the developers paper profits of $12 million and left the S&L with $14.4 million in bad debts. So by all means, let us appoint a special prosecutor to find out how Clinton came to lose $60,000 in a land deal. But let’s not pretend that it happened in a vacuum. Why not, for the first time, have a team of special prosecutors look into the entire S&L mess? Most of the statutes have run; no one stands to be indicted. But we deserve to know how it came about that we got stuck with this bill. “Cry ‘Havoc!’ and let slip the dogs of war.” I’m all for it. ,fi l l ,,, Inn r Kitchenettes 1,,fr I leatecl Pool ?* beside ihc Grill\(?fillexico o a ,. 011 illitsiong Island 4,0 ,A\\ allaille I’M private parties ri 0 if/4 I 1 if 411 t 1l/\(/ITC ElfrOpC\(111 \(71\(11711 1 i c_C: . -111110,splICIC g Nomoillic;i1 Fall anti Winter Rates .0, i Pets Welcome Os afr le ‘ Port Aransas, TX 78373 ‘$ ca// fin Rcscsrva t ions 0 FILIF sIMILliki, 411, I”, ….Old: 26 44.4 Ir %%4 ea Horse Cable TV j THE TEXAS OBSERVER 13