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Despite the persistent spotlight on the President's son, the story of Silverado's amazing expansion and rapid demise illustrates the broader evils behind the S&L disaster. It is a tale of interlocking relationships and sweet deals among S&Ls and their biggest customers, the possible impact of political contributions in delaying crackdowns by regulators, even the deceptive lure of junk bonds and their king, Michael Milken. It is not a case history of nice guys being caught innocently in an oil bust, as the defunct thrift's managers often claim. It is a study in greed, deceit...
...when Denver builder Franklin Burns, cashing in on the postwar housing boom made possible by the GI Bill, set up a friendly little thrift that eventually became Mile High Savings and Loan. He was doing just what Congress had envisioned when it carved out a role for S&Ls in the early 1930s. Limited by law to making home loans and earning the narrow profit margins provided by a relatively stable real estate market, Mile High was helping propel the great American Dream of home ownership for everyone...
Amid the cries of alarm, some experts caution against equating the banking industry's problems with the thrift disaster. Overall, banks in the U.S. earned $26 billion last year, while S&Ls lost more than $19 billion. "I disagree strongly with the notion that the problem in the banking industry resembles the early stage of the S&L debacle," says Thomas McCandless, who follows the industry for Goldman, Sachs. "The regulatory environment has been much more rigorous than the loosey-goosey kind of overview that occurred in the S&L industry...
...made serious accounting errors in interpreting Franklin's financial statements. Federal judge Dale Saffels ordered Franklin handed back to its owners, but regulators won a temporary stay of that order from a Denver federal appeals court. A victory for Franklin would undoubtedly hearten the 25 other S&Ls with similar suits against the OTS. And it would give new force to the contention that the agency has at times been overzealous in taking over thrifts that should have been left alone...
...report from the Resolution Trust Corporation is expected this month, and it figures to stoke congressional ardor to find scapegoats for the S&L mess. The report will examine transactions during 1988, when private investors, at the government's request, scooped up troubled S&Ls and then received whopping federal subsidies for doing so. In 94 cases, entrepreneurs like Ronald ! Perelman, owner of Revlon, and Texas billionaire Robert Bass wound up reaping, on average, $78 for each dollar they invested. Some who received this windfall have argued that their intervention was cheaper than allowing the bankrupt S& Ls to pile...