Thursday, March 15, 2018

The Fair-Minded Shepherd

“... the biggest loosening of financial regulations since the economic crisis a decade ago.... ... would free more than two dozen banks from the toughest regulatory scrutiny put in place after the 2008 global financial crisis. ... it amounts to a significant rollback of banking rules aimed at protecting taxpayers from another financial crisis and future bailouts. / In a statement, White House press secretary Sarah Huckabee Sanders praised the legislation’s passage. ...”

It was a hard winter, and the grass was sparse. The previous shepherd in such a circumstance would speak of “grace” and bring alfalfa, but the new shepherd said it was “only fair” that the flock should “just work harder to find whatever food there is in the pasture.” However, the men who loaded a truck with bags from the alfalfa fields seemed grateful to the shepherd.

Some of the sheep had fallen ill or suffered injuries. Thinking of the care they used to receive from his predecessor, they turned to the shepherd, but he said it was “only fair” to let the strongest survive.

While the winds and wolves howled wildly outside the fences, the flock huddled together for warmth in the center of the pasture, as the shepherd declared it would be “only fair” to show equal “grace” to all inhabitants of the field, grant them utter “freedom” by removing all restrictions, and let this “free field” determine the outcome of events... so he tore down the fences. And, who knows, perhaps even the wolves were grateful to the shepherd.

The Savings and Loan (“thrift”) industry was deregulated by two laws passed in 1980 and 1982, which meant S&L managers took risks previously off-limits; 1981's misnamed Economic Recovery Tax Act led to S&Ls selling their loans at 60% to 90% of value to buy back their reduced value as bonds (for substantial fees). ... “A large number of S&L customers’ defaults and bankruptcies ensued, and the S&Ls that had overextended themselves were forced into insolvency proceedings themselves. The Federal Savings and Loan Insurance Corporation (FSLIC), a federal government agency that insured S&L accounts in the same way the Federal Deposit Insurance Corporation insures commercial bank accounts, then had to repay all the depositors whose money was lost. From 1986 to 1989, FSLIC closed or otherwise resolved 296 institutions with total assets of $125 billion. An even more traumatic period followed, with the creation of the Resolution Trust Corporation in 1989 and that agency’s resolution by mid-1995 of an additional 747 thrifts. A Federal Reserve Bank panel stated the resulting taxpayer bailout ended up being even larger than it would have been because of moral hazard and adverse selection incentives that compounded the system’s losses. There also were state-chartered S&Ls that failed. Some state insurance funds failed, requiring state taxpayer bailouts.” [Wikipedia]

You notice, the S&Ls were not only no longer being regulated to manage themselves the RIGHT way, they were given incentives to manage themselves the WRONG way.

The same sort of thing, deregulation-enabling-corruption-and-collapse, happened during the George W. Bush administration, only with the main banking system and Wall Street (“Foreclosuregate” being part of that scandal), leading up to the Global Crash of 2008.

It was a swindler’s dream scheme: America lost over $10 Trillion of wealth in 2008 (per Business Insider), and once again most of those who profited vanished without ever being tracked down and held to legal account.

So it is significant that, like Trump...
E.g.: “Reagan...’s first opportunity to revise the federal budget yielded a one-third cutback of the FBI's investigations into gambling, prostitution, arson-for-profit, gangland murders, and pornography — along with a hiring freeze and dramatic staff reduction within the FBI. Reagan also indicated that no new undercover operations would be authorized against organized crime or white-collar crime. Instead, the Reagan Justice Department wanted to concentrate on street crime and small drug use.”

Along with, you may recall, Nancy’s “Just Say No” ad campaign….

These had been, of course, greatly self-proclaimed “Law and Order” candidates.

Now here we go again.

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