Subject THE CIA ROLE IN THE S+L CRISIS Written 416 pm Feb 25, 1991 by christic in cdpchris

Subject: THE CIA ROLE IN THE S&L CRISIS
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 Written 4:16 pm Feb 25, 1991 by christic in cdp:christic.news


  THE CIA ROLE IN THE SAVINGS AND LOAN CRISIS
  Project Censored: Nomination for the "Ten Best Censored Stories of 1990"


  It is now estimated that some 500 billion to 1.4 trillion taxpayer dollars 
will be needed to bail out the savings and loan crisis. One very obvious 
question, which has not been asked by the major news media, is what happened 
to so much money?

  At least one investigative journalist, Pete Brewton, of the Houston Post, 
believes he has the answer. On February 4, 1990, Brewton wrote "During an 
eight-month investigation into the role of fraud in the nation's savings and 
loan crisis, The Post has found evidence suggesting a possible link between 
the Central Intelligence Agency and organized crime in the failure of at 
least 22 thrifts, including 16 in Texas."

  It was the first in a series of S&L articles by Brewton that found links 
beween S&L's, organized crime figures, and CIA operatives, including some 
involved in gun running, drug smuggling, money laundering and covert aid to 
Nicaraguan contras. If S&L funds went to the contras or other covert 
operations it would help explain where some of the money went.

  In his March 11, 1990, article, Brewton even suggested links between 
President Bush's son Neil and the CIA/organized crime figures: "A failed 
Colorado savings and loan whose board of directors included a son of 
President Bush was part of an intricate web of federally insured financial 
institutions that had business links to organzied crime figures and CIA 
operatives, The Houston Post has learned."

  Despite the blockbuster nature of Brewton's exposes, the major news media 
have not been quick to follow-up. As Robert Sherrill points out in his 
extraordinary analysis of the S&L crisis in an unusual single subject issue 
of The Nation (11/19/90), "Brewton's stories have not exactly stirred the 
national press to action."

  The strange silence on the part of the press led Steve Weinberg, former 
executive director of Investigative Reporters & Editors, to investigate the 
accuracy of Brewton's charges. Weinberg raises two key questions: if 
Brewton's information is wrong, what should other journalists be doing to 
set the record straight, and if he is right, why have most news 
organizations failed to assign their own reporters to the scandal?

  C. David Burgin, The Post's executive editor, explained why The Post has 
devoted so much space to such a controversial issue aparently without 
conclusive proof. "At this juncture, at least, the 'smoking gun' probably 
will have to be found by Congress or the Justice Department, which have 
subpoena power....Meanwhile, taxpayers somehow will have to foot the bill 
for these enormous losses. The Post will continue its investigation and 
hopes at the same time the national press, in the public's interest, will 
take a harder look."

  After reviewing Brewton's documentation and interviewing a number of 
journalists, some of whom reject Brewton's thesis totally, and others, 
mostly alternative journalists, who support it, Weinberg concludes that the 
national press should take a harder look at his charges. Project Censored 
also agrees that this undercovered aspect of the S&L issue deserves the 
national media's critical attention.

  SOURCES: THE HOUSTON POST, 2/4/90+, series of articles by Pete Brewton; 
THE NATION, 11/19/90, "The Looting Decade," by Robert Sherrill, pp 589-623; 
COLUMBIA JOURNALISM REVIEW, Nov/Dec 1990, "The Mob, The CIA, and the S&L 
Scandal," by Steven Weinberg, pp 28-35.


  End of text from cdp:christic.news
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 Written 4:14 pm Feb 25, 1991 by christic in cdp:christic.news


  THE S&L CRISIS: THE SOLUTION IS WORSE THAN THE CRIME
  Project Censored: Nomination for the "Ten Best Censored Stories of 1990"


  An early estimate of the cost to taxpayers to bail out the savings and 
loan industry was $155 billion. More recently, a Wall Street Journal 
correspondent suggested a $1.4 trillion figure. But the most "acceptable" 
figure for the bailout appears to be $500 billion.

  To put that $500 billion in perspective, it helps to realize that the 
entire cost of World War II, in current dollars and including 
service-connected veterans' benefits, is about $460 billion--or $40 billion 
less than the S&L bailout. The cost of the Vietnam war, including benefits, 
was $172 billion; Korea was $70 billion; World War I was $63 billion. The 
Civil War was $7 billion. The combined assets of Prudential, Metropolitan 
Life, Equitable Life, Aetna, Teachers Insurance, New York Life, Connecticut 
General, Travelers, John Hancock and Northwestern Mutual don't add up to 
$500 billion. The combined 1988 profits of all the companies on the Fortune 
500 list added up to just $115 billion. And the combined 1987 budgets of all 
50 states didn't add up to $500 billion.

  In fact, the total federal expenditures on one of the nation's most 
widespread and tragic problems--the homeless--is little more than one-tenth 
of one percent of the amount we'll spend to bailout the savings and loan 
industry.

  This bailout was engineered by the Resolution Trust Corporation (RTC)--the 
government's misnamed S&L caretaker which is engaged in a massive giveaway 
that will make Teapot Dome look like a demitasse cup. The RTC is the 
nation's largest operator of financial institutions and, according to The 
New York Times, "quickly becoming the biggest financial institution in the 
world, the largest single owner of real estate, the largest liquidation 
company and the largest auction firm." The RTC solution includes a little 
known $500 million in outside legal fees and $37 million in administrative 
costs. And the RTC was established without any meaningful public debate nor 
with any serious consideration of alternatives.

  Here's just one example of the RTC solution: an Arizona insurance 
executive with a history of legal and regulatory problems was allowed to buy 
15 involvent Texas savings and loan associations with $1000 of his own money 
and $70 million of borrowed money and in turn was promised $1.85 billion of 
taxpayers' money in federal subsidies. Commenting on this revelation, 
Senator Howard Metzenbaum said "In all my years in public office, I have 
never seen such an abandonment of public responsibility ...". Remember, this 
case was not part of the S&L crisis, but part of the so-called solution.

  One can't expect Congress to be seriously concerned about any solution 
considering that S&Ls gave $45 million to congressional candidates during 
the past three elections, including more than $1 million to members of 
current congressional banking committees. What has taken place involves 
fraud, malfeasance, misfeasance, and nonfeasance of a scope never seen 
before. No war, no defense program, no social program, no other scandal has 
ever cost what this will cost. And yet the media, absorbed in human interest 
aspects of the crisis at best, relegate important S&L stories to the 
business pages despite their enormous effect on every American.

  SOURCES: THE PROGRESSIVE REVIEW, "No-Fault Capitalism Meets Lemon 
Socialism," August 1990, by Sam Smith; WALL STREET JOURNAL, 8/9/90, 
"Viewpoint: Biggest Robbery in History--You're the Victim," by Michael 
Gartner, p A11.


  End of text from cdp:christic.news
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