Thursday, September 18, 2008

The Party of Lincoln Savings & Loan

President Bush talked about America's serious economic crisis when he addressed the country. CNN's business talking heads mentioned the Resolution Trust Corporation, the 1980's entity created to wind up failed savings & loans.

Recall one of the big failures, Lincoln Savings & Loan? It was led by Charles Keating, the same Keating who approached five Senators for aide, one of them John McCain. The corruption investigation concluded McCain exercised "poor judgement".

Deregulated Savings & Loans undertook high risk loans, which failed in droves. Sound familiar? Only today's problems are much worse. Wall Street did more than package bad loans and sell them as securities. They innovated credit default swaps, securitizing what is now financial vaporware, to the tune of a worldwide $62 trillion.

The boys on Wall Street cranked up the risk/reward angle. What made them boatloads on the way up, cuts off limbs on the way down. Blood is in the streets.

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