The Savings and Loan Scandal and Public Accounting
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Just as the convictions of the Enron executives were being handed down, the next accounting scandal may be looming. The exact same macroeconomic dynamics that are being repeated today. Oil has shot to over $70 per barrel with no end in sight, and America has been gripped by real estate hysteria the past few years. Americas financial institutions have been inventing the high-risk loans that have fueled the latest real estate craze, particularly in California. No down payment, no principal payments for several years, variable interest rates, forty-year and even fifty-year mortgage terms and other innovations have put many millions of American homeowners in vulnerable situations. Once again, the prudent principles of the real estate/banking business are being abandoned. As energy prices skyrocket, inflation and interest rates will not be far behind. It is already beginning to turn around in the spring of 2006, with housing inventories growing rapidly.
Enron – The rise, the fall, and tales that were tall – Part 1
It was definitely a bi-partisan scandal, and both George Bush and Lloyd Bentsen kept the scandal quiet until after the 1988 election, as they both were deeply involved in the scandal, as was their crony Walter Mischer and others. Neil Bush helped loot Silverado Savings, which cost the taxpayers more than $1 billion, and the same people who orchestrated much of the S&L scandal that dwarfed the S&L Scandal. The criminal behavior engaged in by George Bush the First and friends was staggering, and they mainly got off scot-free by using front men and plausible deniability (much of the denial was not that plausible) to dodge the worst of the charges. Corrupt and greedy politicians and regulators also played their part. The focus of this essay, however, is presenting the role that my profession played in it, and how the next scandal that comes along will likely be handled the same way (and was), because the same conflict of interest and invitation to corruption still exists. There was no basic reform in the wake of that disaster. This essay will cover the basics of how the money was stolen from the S&Ls and how my profession abetted it.