Mayer, Martin. The Greatest-Ever Bank Robbery: The Collapse of the Savings
and Loan Industry. New York: Charles Scribner's Sons, 1990. 354 pages.
Martin Mayer was a member of the finance committee of the President's
Commission on Housing beginning in 1981, and has written nearly a dozen
books on business and finance, including the bestselling "The Bankers"
(1975). In 1982, Congress passed the Garn-St.Germain Act, which tended
to deregulate the savings and loans. Until then the industry concentrated
on the community-based home-mortgage business, but now it was free to
speculate. Getting the cash for these new, risky investments presented
no problem, because the federal government still insured all deposits.
The U.S. Treasury had to cough up $500 billion to get out of this mess.
Despite the witty humor, it requires fortitude to wade through this
book's alphabet soup of regulatory agencies, mixed with esoteric financial
instruments pushed by Wall Street sharks. Mayer's conclusion is that deposit
insurance was the "crack cocaine of American finance" -- once good old
American greed was deregulated, the door was open for massive abuse. Who got
the money? Wall Street investment houses got most of it, depositors got some
of it because of high interest rates, and the Mafia types and Texas cowboys
came in third. Who's to blame? The accounting profession was dishonest, and
big-name law firms bullied the regulators. In the end, their S & L clients
had plenty of time to convert deposits into questionable investments.
ISBN 0-684-19152-0
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