Word: thrift
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Dates: during 1990-1999
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Last year President Bush pledged "every effort" to lock up the white- collar criminals who had helped cause the nation's savings and loan disaster. Indeed, with studies showing that insider misconduct has contributed to 60% to 75% of all thrift failures, the search for banking's bad guys is one of the largest criminal manhunts in U.S. history. But, like Bush's war on drugs, the war on S&Ls has completely overwhelmed prosecutors and investigators. There are more than 3,500 major criminal cases pending, yet 1,500 of them are inactive and gathering dust. Indeed, the backlog...
...moved to New York City when he was a youngster, Paul returned in 1983 as a little known real estate developer with a $52 million offer to buy the faltering Dade Savings and Loan (assets: $2.2 billion). State regulators were happy someone was willing to take over the sick thrift. Paul renamed the S&L and within a few years sent its profits zooming. His method: investing CenTrust's assets heavily in junk bonds, many of which he bought from Michael Milken at Drexel Burnham Lambert. By the late 1980s the payoff from CenTrust's $1.35 billion portfolio of junk...
...costs of the bailout, sluggish disposal of the real estate could help push the total cost of the rescue to more than $300 billion during the next 30 years. "The cost of carrying that stuff is going to kill you and me as taxpayers," says Richard Kneipper, a Dallas thrift lawyer...
...Many thrift experts attribute the near paralysis to the way Congress -- at the Administration's insistence -- split responsibility for the rescue between two groups. The RTC's operations are supervised by William Seidman, head of the Federal Deposit Insurance Corporation, an independent agency that polices the banking industry. But a separate panel called the RTC Oversight Board, which is chaired by Treasury Secretary Nicholas Brady, decides RTC policy and controls its funding. Congress agreed to give the Treasury a role so that the Administration would have a major stake in the bailout, but dividing responsibility has prompted feuding between...
...executive of the Oversight Board. But Kearney quit in February after just four months on the job, citing a lack of authority "essential to be effective in this process." At the same time, the Treasury Department is having trouble replacing M. Danny Wall, the head of the Office of Thrift Supervision, who oversees the surviving S&Ls. Wall resigned in December but has been asked to stay on, even though he was sharply criticized last year for giving overly generous Government guarantees to buyers of crippled...