The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry

353 Pages·2005·3.32 MB·English

by  William K. Black

The Best Way to Rob a Bank Is to Own One
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william k. black
The Best Way
to Rob a Bank
Is to Own One
How Corporate Executives
and Politicians Looted the
S&L Industry
University of Texas Press
Austin
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Copyright © 2005 by the University of Texas Press
All rights reserved
Printed in the United States of America
First edition, 2005
Requests for permission to reproduce material from this work should be sent to
Permissions, University of Texas Press, P.O. Box 7819, Austin, TX 78713–7819.
(cid:1)(cid:1) The paper used in this book meets the minimum requirements of
ansi/niso z39.48–1992 (r1997) (Permanence of Paper).
library of congress cataloging-in-publication data
Black, William K. (William Kurt), 1951–
The best way to rob a bank is to own one : how corporate executives and politi-
cians looted the S&L industry / William K. Black.— 1st ed.
p. cm.
Includes bibliographical references and index.
isbn 0-292-70638-3 (cloth : alk. paper)
1. Savings and loan associations—Corrupt practices—United States. 2. Savings
and loan association failures—United States. 3. Savings and loan bailout, 1989–
1995. I. Title.
hg2151.b52 2005
332.3(cid:2)2(cid:2)0973—dc22
2004021232
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To June:
I’m glad Joy burned the soup.
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Contents
Abbreviations ix
Preface xiii
Acknowledgments xxi
chapter 1 Theft by Deception: Control Fraud in the
S&L Industry 1
chapter 2 “Competition in Laxity” 17
chapter 3 The Most Unlikely of Heroes 41
chapter 4 Keating’s Unholy War against the Bank Board 63
chapter 5 The Texas Control Frauds Enlist Jim Wright 83
chapter 6 “The Faustian Bargain” 113
chapter 7 The Miracles, the Massacre, and the Speaker’s Fall 141
chapter 8 M. Danny Wall: “Child of the Senate” 167
chapter 9 Final Surrender: Wall Takes Up Neville Chamberlain’s
Umbrella 213
chapter 10 It’s the Things You Do Know, But Aren’t So,
That Cause Disasters 246
appendix a Keating’s Plan of Attack on Gray and Reregulation 269
appendix b Hamstringing the Regulator 275
appendix c Get Black . . . Kill Him Dead 278
Notes 281
Names and Terms 307
References 315
Index 321
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Abbreviations
AA Arthur Andersen, a “Big 8” accounting fi rm
ACC American Continental Corporation; Keating holding
company used to buy Lincoln Savings
ACFE Association for Certifi ed Fraud Examiners
ADC acquisition, development, and construction
AICPA American Institute of Certifi ed Public Accountants
ARM adjustable-rate mortgage
AY Arthur Young & Company, a “Big 8” accounting fi rm
C&D cease and desist order
CDSL California Department of Savings and Loans
CEBA Competitive Equality in Banking Act (of 1987); authorized
the FSLIC recapitalization
CEO chief executive offi cer
CFO chief fi nancial offi cer
CPA certifi ed public accountant
CRA Community Reinvestment Act
CRAP creative regulatory accounting principles
DCCC Democratic Congressional Campaign Committee
DNC Democratic National Committee
DOJ United States Department of Justice
ERC Enforcement Review Committee
FAS Financial Accounting Standards
FASB Financial Accounting Standards Board; top accounting-
profession standard-setting body
FBI Federal Bureau of Investigation
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