|
Lobbyists in a “Pay to Play” Legislative World ê |
The savings and loan
industry: §
and made large
contributions to it |
|
Legislative Branch deregulates the paying industry ê |
Congress deregulated the
industry (President Reagan’s term). |
|
Legislative Branch removes
risks from the paying industry ê |
Congress also increased the
amount of depositors’ money insured by the citizens to $100,000. Practical
reality: Congress removed risk from
the savings and loan industry and transferred it to taxpayers. |
|
è |
Result: Savings and
loans could-and did-invest depositors’ money in riskier areas. |
|
Executive Branch removes the remaining regulators ê |
The Reagan administration
reduced the number of banking and regulatory examiners. Practical reality: The Executive Branch
reduced the number of experts who might have caught extreme irregularities
and provided warnings. |
|
è |
Result: Savings and loan industry collapsed (George H.
Bush’s term). |
|
Who took the hit? è |
Who paid? Ordinary
people How much? $500 billion just to bailout depositors[1] |
[1] Ayers, American Passages, 2nd Edition, pages 861 (for events in Ronald Reagan’s term), 874 (for events in George H. Bush’s term).