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Title: The Savings and Loan Debacle: Twenty-Five Years Later
Source: Mises.org
URL Source: http://www.lewrockwell.com/2014/08/ ... einreich/the-crony-sl-debacle/
Published: Aug 13, 2014
Author: Dale Steinreich
Post Date: 2014-08-13 09:22:51 by Ada
Keywords: None
Views: 45
Comments: 7

August 9, 2014 marks twenty-five years since the signing into law of the US savings and loan (S&L) industry bailout, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989. After FIRREA was signed into law by President George H.W. Bush, the federal government took control of 327 failed S&Ls with $147 billion in assets.

“Deregulation” Did It?

By now the S&L scandal lies deep in the Memory Hole, but at the time, the mainstream media had the greatest effect on how most Americans viewed the debacle. A quarter of a century ago the mainstream press and television media — as with the 2008 financial crisis — portrayed the debacle as the inevitable result of unfettered free markets run amok. In particular, they focused on an alleged spurt of deregulation that supposedly occurred during the “laissez- faire” Reagan administration (January 1981-January 1989). A current expositor of this view is of course Paul Krugman.

This favorite go-to of progressives is not only completely unsupported by facts but further investigation also reveals what a sham the supposedly free-market Reagan really was.

As a chart from Business Economics[1] reveals, the 1970s to 1980s wave of “deregulation” actually began in 1976 with the railroad industry under President Gerald Ford. From 1978 to 1980, President Carter signed four laws relaxing regulatory controls over the airline, railroad, trucking, and banking industries. The vaunted “free market” Reagan only signed two relaxations of controls over the busing and thrift industries.

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#1. To: Ada, 4 (#0)

The S&L meltdown was the direct result of the 1986 Tax Reform Act; here's the key provision that caused real estate investors to "mail in" the keys - (the act) "restricted the use of passive tax shelters to income gains or losses from investment portfolios, instead of a taxpayer's gross income."

By 1988-89, when the blood was in the water and institutions were drowning in foreclosed properties, new investors could purchase real estate for 25-35 cents on the foreclosed dollar.

It was the greatest transfer of property outside the world wars.

“The most dangerous man to any government is the man who is able to think things out... without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable.” ~ H. L. Mencken

Lod  posted on  2014-08-13   10:15:44 ET  Reply   Trace   Private Reply  


#2. To: Lod (#1)

I keep my money in my mattress. Sleep on it every nite.

Cynicom  posted on  2014-08-13   10:49:59 ET  Reply   Trace   Private Reply  


#3. To: Cynicom (#2)

Be sure that your executor knows so it doesn't get hauled off to Goodwill...

“The most dangerous man to any government is the man who is able to think things out... without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable.” ~ H. L. Mencken

Lod  posted on  2014-08-13   11:01:36 ET  Reply   Trace   Private Reply  


#4. To: Lod (#3)

He has alarm system attached.

Cynicom  posted on  2014-08-13   11:04:12 ET  Reply   Trace   Private Reply  


#5. To: Cynicom (#2)

I knew a French dude years ago who swore that his grandmother kept her Camembert and her gold stashed in her mattress.

"If ignorance is truly bliss, then why do so many Americans need Prozac?" - Dave McGowan

randge  posted on  2014-08-13   11:08:12 ET  Reply   Trace   Private Reply  


#6. To: randge (#5)

Am not a gold bug.

Like Camembert room temp.

Am half Frenchie but take a bath once a week, dont use perfume.

Cynicom  posted on  2014-08-13   11:19:46 ET  Reply   Trace   Private Reply  


#7. To: Cynicom (#6)

My French friends say you'll know the Camembert is ripe: When you cut it and it runs back to the factory. ; ]

"If ignorance is truly bliss, then why do so many Americans need Prozac?" - Dave McGowan

randge  posted on  2014-08-13   14:44:33 ET  Reply   Trace   Private Reply  


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