S & L Hell: The People and the Politics Behind the $1 Trillion Savings and Loan Scandal

by Kathleen Day

A far reaching account of the savings and loan crisis that speculates on the many devious motivations of all involved, from the President of the US on down. The author, a Washington Post reporter, tells the tale in an unforgiving, even accusing manner, but his evidence is rarely circumstantial. A very disturbing book that reveals a lot about how, at least in this instance, government and business failed to serve the people. Annotation copyright Book News, Inc. Portland, Or.

Genres: Finance, Nonfiction

416 pages, Hardcover

First published May 17, 1993

Reviews

[Lisa the Tech · Rating 4 out of 5]

The 1980s were a heady time, full of expansion – especially in the U.S., and the moneyed men lost sight of what was important. 1 trillion dollars. I have a hard enough time visualizing what I’d do with several million dollars. 1 billion dollars alone boggles the mind, but 1,000,000,000,000! Twelve zeros. Beyond the human comprehension (at least beyond this human’s comprehension)! One thing that I note in this fantastic book is the way the moneyed men eagerly embraced their incredible delusions, and did everything in their power to keep reality from intruding.
There is a sad difference between the insular, high-greed world enjoyed by the moneyed men and the heart-breaking losses the everyday people who trusted these fiends and scoundrels suffered.

(Taken from a 2008 diary entry)

[Steven H · Rating 5 out of 5]

A JOURNALIST RECOUNTS THE HISTORY OF THE SAVINGS AND LOAN CRISIS

In her Introduction to this 1993 book, Kathleen Day (a reporter for the Washington Post) said, "The savings and loan debacle is the costliest scandal in the country's history. Bailing out the S&L industry will cost taxpayers at least $500 billion over the next few years and more than $1 trillion over the next several decades... this book doesn't advance a grand theory. Instead it tells the history of the scandal through the stories of the principal players."

She wrote, "Hundreds of unhealthy S&Ls created what bankers likened to a cancer. Bankers argued that sick thrifts undermined the strength of healthy financial institutions on two fronts. Ailing S&Ls eroded public confidence ... and they sparked unfair, cutthroat competition by offering higher than market rates to lure deposits that they could sink into risky but potentially high-yielding investments they hoped would let them outgrow their problems." (Pg. 229)

Lawmakers faulted the new chairman of the Federal Home Loan Bank Board, arguing that he "failed to sound the alarm when the industry was being consumed." (Pg. 334) After President Bush had unveiled his bailout plan, "the Treasury official in charge of the cleanup... (tried) to convince reporters not to call the administration's program a bailout. He and his colleagues favored the term 'cleanup.' The money... was not going to bail out shareholders, who generally lost everything when the thrifts failed, but to depositors." (Pg. 375)

Day summarizes, "Regulators estimate that fraud played some role in 75 percent of the thrifts that failed. But economists argue that ... there was at least as much simple incompetence by thrift managers who plunged institutions into risky business they knew little about." (Pg. 387)

This is one of the best books written on the savings and loan crisis.

[Troy Jensen · Rating 3 out of 5]

A thorough account of the Savings & Loan Crisis of the late 1980’s/early 1990’s. Having been given a very real and visceral view of the highs and lows of the S&L Crisis, the Southwestern US real estate collapse in the early 90’s, and Charles Keating and his Lincoln Savings & Loan along with a small thrift (Arrowhead Savings & Loan, Lake Arrowhead, CA) via my family, I took issue with some of the author’s accounts and conclusions. But leaving those errant passages aside, I must say the author really dove into detail. A bit dry considering the era and the players, but indeed a thorough look at the S&L Crisis.

Note: To be completely fair, the book was published in mid-1993; the author can be forgiven for not ending Charles Keating’s story - he was ultimately released on appeal on BOTH his California State and Federal charges after a five-year battle from the confines of a Federal Prison; Keating died having never plead nor having been convicted of a single crime related to Lincoln Savings & Loan. And the author’s estimates of the cost of the Crisis, while fair at that time to some, proved to be FAR lower than most had anticipated. The government was able to sell off many of the assets from the failed thrifts at prices that would have made depositors and investors whole had they not shut down many S&L’s so fast.

[Alex Flores · Rating 5 out of 5]

This approach probably isn't for everyone, but I read this book AFTER I read a number of book about the 2008 financial collapse, and I found it fascinating and infuriating that so, so many of the issues and fraud and deregulation that caused the 2008 collapse were so clearly the same ones that cause the Savings & Loan crash. This is a good book to read because you also wind up getting a good history lesson. Read it after you've read any of the books covering the 2008 collapse and you'll find yourself wondering "how they do we allow this to happen?" and "no one in politics is honest or even trying to do the right thing."

[Don · Rating 3 out of 5]

Great popular account of the crisis.

[Mark Bunch · Rating 5 out of 5]

The best book on the US Savings and Loan crisis of the 1980s.