The Big Fix
Adams, James Ring
T wo billboards on 1-30 West catch 1 the spirit of present-day Dallas. One, over a portrait of a tractor-trailer, reads: Data SHRED Mobile Document Disintegration On-site destruction The second,...
...Dixon and his officers constantly made insider loans to themselves and their cronies, including shady developers and other "go-go" thrift owners...
...In 1985, Gunbelt financed the purchase of eighty-four Rolls Royces, some painted with peacocks and geese, from the collection of the Bhagwan Shree Rajneesh at Rancho THE AMERICAN SPECTATOR MARCH 1989 Rajneesh, Oregon...
...The cars, the houses, even the text of "Gastronomique—Fantastique' were laid out in public view...
...Petersburg...
...The reason is that the insolvent thrifts are trying to stay open by expanding...
...It may well be the most extensive case of congressional corruption since the Credit Mobilier scandal of 1878...
...The Garn-St Germain 23 Act of 1982 deregulated thrifts, broadening the range of their activities and making it easier for the wrong sort of developer and high roller to enter the industry...
...Banks and thrifts often sell shares, or "participations," in a loan to other inTHE AMERICAN SPECTATOR MARCH 1989 stitutions to spread the risk...
...Beebe also acted as banker to Carlos Marcello, the legendary head of the New Orleans Mafia...
...Occasionally they diverted the directors by providing prostitutes...
...On the Riviera, they lunched with "a famous French artist, Cesar, and also a movie script writer...
...And so it went, in an orgy of vulgar consumption...
...Dixon did at least a billion dollars of damage in his six years in finance, but he is not unique...
...One, over a portrait of a tractor-trailer, reads: Data SHRED Mobile Document Disintegration On-site destruction The second, further west, offers a competitor's challenge: Why shred...
...When FSLIC finally took over Vernon in March 1987, it found that 96 percent of the loans were worthless, possibly a new world record...
...T o understand the thrift crisis, look 1 at one leader of this cabal, the owner of the Vernon Savings and Loan in the Dallas suburb of Vernon, a self-made hometown boy named Don Ray Dixon...
...O ne of Dixon's playthings, however, was no mere self-indulgence...
...Ostensibly "a bit of market study" for a "world class restaurant" for Dallas, the Dixons and another Vernon couple toured by private plane and 1954 Silver Dawn Rolls Royce in the company of Yolande and Jean Castel, owners of that " 'in,' very chic" club...
...The most notorious thrift owners have already been connected both with suspected agents of organized crime and with powerful members of Congress...
...One, Jack Franks, managed the High Spirits partnership for a time...
...The cabal had the influence to strangle FSLIC itself...
...The cabal of thrift-owners had one very big trump, the United States Congress...
...This part of the financial system, originally designed to finance home mortgages, is now surviving on blind faith, baling wire, or, depending on your viewpoint, the incredible prestidigitation of Danny Wall, chairman of the Federal Home Loan Bank Board...
...Ushered by their "charming," "witty," and "twinkling" escorts, the Dixons hopped from La Tour d'Argent and Brasserie Lipp in Paris to the Troisgros in Roanne, to the restaurant of Paul Bocuse in Lyon, to Moulin de Mougins in Nice...
...But they were frustrated by political interference...
...And the more the rotten thrifts try to stay alive by expanding their deposit base, the greater the charge they leave for the deposit insurance corporation, and ultimately, the taxpayer...
...So where were the regulators...
...present danger comes from the bankruptcy of the humble neighborhood thrifts...
...Dixon also did multi-million dollar Florida real estate deals with Raleigh Greene's Florida Federal Savings and Loan in St...
...In July 1986, Symbolic held an auction that 22 sold eight of Dixon's cars for $1.8 million and still managed to lose $200,000...
...THE AMERICAN SPECTATOR MARCH 1989 States...
...In an earlier thrift case involving development along 1-30, the U.S...
...Following earlier plea bargains in Florida and Kansas, he was recently convicted in the federal district court in Brooklyn on charges that he marketed money from several union welfare funds in return for kickbacks...
...The answer is simple, but you won't hear it from a congressional investigation...
...These names show up on the records of East Texas First, a PAC organized by Thomas Gaubert for the sole purpose of beating the Republican candidate in the now famous 1985 special election in Texas's First Congressional District...
...He also worked with developers in California who, according to a civil suit, once enforced a disadvantageous business deal by cracking the ribs of their negotiating partner...
...Dixon gushed about an October 1983 tour of the ritziest restaurants in France...
...They faked minutes for directors meetings, adding loans the board never approved...
...That's called a risk premium, or nowadays, a "Texas premium...
...A congressional report singles out the 79-year-old Marcello as the most prestigious Cosa Nostra leader, partly because his "family" was the first to be established in the New World, in the 1890s...
...With his gold chains, open shirts, and at one point a well-groomed beard, Dixon reminded the Texas Monthly of the country singer Kenny Rogers...
...The regulators were indeed beginning to catch up with high living and bad loans, but their response was still so feeble that the industry's complaints seem ludicrous in retrospect...
...If this fact suddenly sank in on every depositor, we could have a bank panic to equal 1933...
...Expecting a crash at any moment, they try to spend their money as quickly as they can...
...In the meantime, the open but insolvent thrifts, the "living dead" as they are merrily called, are losing money at a rate of up to $30 million a day...
...Pusey calls him a man of wry humor, who gave one daughter the name Easter Bunny Beebe...
...treasury secretary, and presidential candidate, and his protégé Ben Barnes, whose political career was wrecked in the Sharpstown bank scandal twenty years earlier...
...At one point a Marcello associate tried to buy a bank from Beebe...
...When Dixon desired a pied-a-terra in California, Vernon obligingly put up $2 million for a beach house in Del Mar...
...That is the Federal Savings and Loan Insurance Corporation, also called FSLIC, (pronounced "fizz-lick"), and this fund has been broke for two years in a row...
...When the Dixons began building another house in Rancho Santa Fe, California, they The savings and loan debacle is no longer the product of regional recession, or declining oil prices...
...As Congress scurries and postures on the thrift crisis, you may expect a great deal of indignation about everything but its real cause, the politicization of federal supervision...
...North-Park officers contributed $7,000 so soon after their stock loan was refinanced that a prosecutor might ask whether there was some connection...
...In August and September, Coelho used Dixon's planes for trips to California...
...The House hadn't acted at all, so in conference committee St Germain "compromised" at $100,000...
...But it's still a disaster made in Washington...
...The trip was also paid for by the Vernon Savings and Loan...
...Regulators are practically shouting from the housetops that we're up against bad management, bank looting, and big-time fraud, unimaginable fraud so massive that it's the corrupt thrifts that have been hurting the economy...
...A separate bill for flowers came to $36,780...
...Since Black spoke, the Texas 40 has grown to about 200 and FSLIC's losses have escalated from $20 billion to $70 billion and now possibly $100 billion...
...The "D-triple-C" was the personal creation and nationwide Tammany of California Congressman Tony Coelho, who has parlayed his fund-raising prowess into the third-ranking position in the House of Representative's Democratic hierarchy...
...There's been a fair amount of press about this yacht, and much more about House Speaker Jim Wright's wire-pulling on behalf of Dixon, but somehow it doesn't convey the extent to which Dixon's cabal penetrated the congressional leadership...
...He went away to UCLA for his business degree, then kicked around in a series of jobs, including a stint of 21 unemployment, until the late seventies, when he launched his own Dallas development company...
...That first night in Paris we had dinner at Castel's, the `in,' very chic private club in St...
...The PAC raised nearly $100,000, tipping the vote narrowly to the Democrat, Jim Chapman, delighting Tony Coelho and helping Jim Tony Coelho was a contradiction, engagingly open about his Campaign Committee yet willing to ignore legal restraints in accepting Dixon's help...
...But Congress made this impossible...
...Dixon wanted a yacht, so he bought the 112-foot High Spirits, launched in 1928 as the sister ship to the Sequoia, the presidential yacht of the Nixon years...
...Dixon was born in Vernon fifty years ago...
...he didn't just sing about it...
...A list was circulated at a meeting," testified Vernon officer Gregory McCormick about one such cleanup...
...T he logical response would have 1 been to close down the insolvent thrifts before they built up further claims on deposit insurance...
...This partnership looked bad on Vernon's books, and some partners refused to pay on their notes, so Dixon decided to unload the yacht on two reluctant businessmen who were desperate for a loan...
...The ensuing boom in deposit brokering has attracted the ever alert financial scam community...
...THE AMERICAN SPECTATOR MARCH 1989...
...Wright win the Speakership...
...He found that wild over-lending by the thrifts had created an artificial bubble that plopped the state into recession when it burst...
...Rhode Island voters narrowly defeated St Germain in the 1988 election, and he is reportedly under renewed Justice Department investigation...
...Dixon even had the Vernon subsidiary absorb a $200 charge for towing his classic Hispano-Suiza...
...But the most curious character is a Shreveport, Louisiana, bank and insurance man named Herman K. Beebe...
...Germain," wrote Dana Dixon, Don's wife, in a paper later found by federal examiners in the files of Dixon's Vernon Savings and Loan...
...Regulators talk about the "Texas 40," the two-score or more insolvent thrifts destroyed by owners just as unscrupulous as Dixon...
...From 1981 on, the two were joint investors in real estate from Louisiana to California...
...Local connections had less glamour but they increased fund-raising prowess...
...But we know the most about Dixon, thanks to a flood of documents that FSLIC saw fit to release when it sued him for fraud...
...It was truly a dream trip," exclaimed Mrs...
...But they refused to register the title, causing months of aggravation when FSLIC foreclosed on the boat a year later...
...In the "rent-abank" system, eight investor groups controlled twenty banks, swapping control and lending each other large amounts they didn't bother to pay back...
...In September, Dixon's surviving board sought "voluntary supervision" by the Texas Commissioner of Savings and Loan Associations, hoping for a "less confined environment...
...Edwards received a retainer of $100,000 a year during the interval between his second and third terms as governor...
...Even in legitimate hands, the brokering of large deposits perverts the original intent of federal deposit insurance, which was to protect the small saver but preserve market discipline on imprudent management...
...A constant worry to federal bank regulators and target of an unsuccessful task force, Beebe hired former Louisiana governors Edwin Edwards, a cajun Democrat, and David Treen, a hard-nosed Republican...
...Beebe is now serving a year-and-a-day federal sentence for bank fraud in Louisiana, and has signed a plea agreement with the North Dallas task force on a separate five-year count...
...This practice is okay if the loan is basically sound, i.e., the borrower is paying it back...
...The most expensive of the thrift failures are turning out to be the products of a close-knit cabal designed to plunder deposits and obstruct regulators...
...Pusey is a superb investigator who has done more than any other reporter to expose the S&L scandal, and he sees the "rent-a-bank" case of 1972 to 1976 as the blueprint for the present debacle...
...But Dixon lived like a gambler...
...This scam is based on the very nature of deposit insurance...
...T his background puts quite a dif- 1 ferent slant on the savings and loan debacle...
...Former Florida state regulators remember vividly the fawning treatment Greene received from FSLIC staff...
...Coelho used the yacht at least eleven times in 1985 and 1986 to entertain D-triple-C contributors, but he claims not to have noticed that the High Spirits captain never billed him for the $2,000 a half-day charter fee or the additional costs for food and drink, often running upwards of $1,300...
...as a volunteer, to donate the use of his residence...
...The same schemes, the same problems and many of the same people," he writes...
...Every regulator, bar none, is hiding a case in which higher-ups went easy on a crooked banker with high-level political connections...
...Look at the examiners' struggle with Vernon Savings and Loan...
...Three, it's all insured anyway, so what's the difference...
...One major player with some Texas thrifts has been the First United Fund Ltd...
...The deregulations of the early 1980s played a role, but not necessarily the one argued by Reagan's critics...
...Its own insurance fund is under ominous pressure...
...Vernon financed some of the ventures, ultimately lending Beebe's companies at least $9 million...
...Dixon brought the richly appointed ship to a mooring on the Potomac near Washington, D.C.'s soft-shell crab boats, and he placed it at the disposal of the Democratic Congressional Campaign Committee...
...The Task Force has already charged twenty-eight individuals and convicted seventeen, and its members are settling in for a threeto-five year run...
...Friendly lending institutions were thrown out on the table, or tabled as to who might take what and how much they may buy...
...Two, a national market has grown up in money brokers who package large deposits and chase high interest rates across the country...
...Further easing of rules in Texas and California gave them the power to make truly foolish investments...
...The underpaid, under-trained examiners will be scapegoats, even though their hands were tied by Congress...
...Now in jail on savings and loan fraud charges, Beebe is on his second generation of scandals...
...would use the money to close the most corrupt thrifts...
...Representatives like the lightweight Charles Schumer will rant about the Bank Board's midnight deals to dispose of the "living dead...
...Why the league clawed and scratched on behalf of the crooks rather than the honest thrifts or the depositors remains a mystery...
...The FSLIC scandal just happens to be the hardest to conceal...
...Edwin T. McBirney, who shared $18 million of some Vernon stock loans, ran his Dallas-based Sunbelt Savings Association so recklessly that locals called it "Gunbelt...
...Greene cut St Germain in on a number of Florida real estate deals...
...Coelho started using the High Spirits in May...
...Dixon at one point submitted a one-month American Express Card bill (including overdue balance) of $34,444.42...
...When Brooks Jackson questioned Rep...
...The United States League of Savings Institutions and its ilk feared that FSLIC As investigators pull at the strands of the Texas thrift crisis, they are unraveling a network of fraud and shady dealing far wider and older than anyone had suspected just a few months earlier...
...Both Greene and St Germain have fallen from grace...
...But the House denied FSLIC the money to do anything else...
...Vernon also lent money to a business partner of Morris Shenker, a St...
...He was identified as a financier of the Texas "rent-a-bank" scheme of the early seventies, some of whose figures have emerged once more as owners of failing thrifts...
...Back in 1985, the Bank Board, the Treasury, and the White House began to plead for more money to recapitalize FSLIC...
...But the thrift had even more lurid interests out of state, lending to California figures who had ruined thrifts up and down the West Coast...
...Other congressmen could use the yacht on similar terms, for a time making arrangements through Martin Franks, Coelho's chief of staff...
...Will the thrift crisis finally arouse the voters...
...But the ultimate villains have their lairs in the House and Senate office buildings, and they do their work on the floor of Congress...
...As their loans default, they can't earn enough to cover the interest they pay their depositors...
...Vernon Savings owned a subsidiary called Vernon Capital Corporation, which in turn owned a California company called Symbolic Cars of La Jolla, Inc., devoted to Dixon's passion of buying and selling classic autos...
...The Justice Department Task Force has already issued one indictment over East Texas First in mid-January, charging the president of a smaller thrift with illegally reimbursing his employees for their contributions to the PAC...
...Federal examiners have the duty of chasing crooks out of the thrifts and keeping loans on the straight and narrow...
...A consensus is emerging that the thrift industry is now about $100 billion in the hole and that sooner or later the taxpayer will foot most of the bill for the cleanup...
...We pulp...
...Department of Education are now looking into the thrift's conduct of its student-loan program...
...From 1982 to 1986, Vernon's deposits grew from $80 million to nearly $1.6 billion, an increase of nearly 2,000 percent...
...Rival regulators like the Federal Deposit Insurance Corporation (which insures commercial banks) will try to build an empire on the ruin of the thrifts, but the FDIC has gone through billion dollar failures itself...
...Mrs...
...According to Brooks Jackson, who broke the story about their dealings, the two met when Greene was president of the National Savings and Loan League, the big-thrift trade association...
...The feds are still looking for forty missing pieces...
...Estimates of the size of the problem had once more doubled...
...The bills went straight to Vernon, in apparent violation of the federal campaign finance law...
...24 We owe this achievement to Chairman St Germain...
...If it doesn't, it won't be the last...
...Greene was best buddies with Rhode Island congressman Fernand J. St Germain, chairman of the House Committee on Banking, Finance and Urban Affairs...
...It ultimately cost the federal insurers $1.3 billion to clean up the mess...
...It's not clear that Marcello is deeply involved in the Texas thrift crisis, but Beebe certainly is...
...By stretching every line of credit to the outer limit, it plans somehow to deal with about 200 of them...
...He made his point by freezing the bill to recapitalize the insolvent FSLIC...
...Perhaps it is too gigantic even to be considered a crime...
...Franks has pled guilty to fraud charges in limas and California...
...The reputedly untouchable Treen acted briefly as Beebe's lawyer...
...The Bank Board supervises the fund that thrift depositors rely on to guarantee their money...
...Loans are considered a bank or thrift's "assets...
...Pusey reports that Beebe gave Don Dixon his start, bankrolling his purchase of Vernon Savings and Loan...
...A network of insider loans, self-dealing transactions and stock purchases . . . allowed them to float bad loans through the regulatory system...
...I continually balked at doing the boat loan," said one of these victims, describing a talk with Dixon, "and he said that's the only way we are going to get the shopping center loan done...
...Under the title "Gastronomique—Fantastique...
...In July, the Bank Board imposed a Cease and Desist order on Vernon after several months of negotiation...
...Dixon, "a trip hardly to be imagined by most, and barely to be believed even by those of us who experienced it at first hand...
...Ultimately, FSLIC took over both McBirney's Sunbelt and Gaubert's Independent American, with combined losses of nearly $2.8 billion...
...The Bank Board really got serious in early 1986, and shortly after, the High Spirits showed up on the Potomac...
...In August 1987, Congress finally approved a recap of $10.8 billion in a bill laden with restrictions on the examiners...
...Louis lawyer and Las Vegas casino owner who has figured in Mafia investigations for years...
...Sometimes they tried heroically...
...This has now come to pass...
...Overall, according to FSLIC examiners, the Vernon thrift picked up a travel tab of $68,036.98...
...Speaker Wright started calling Bank Board Chairman Edwin Gray with personal attacks on the most able of the Bank Board examiners...
...But Coelho plunged ahead with the fight...
...In April, a federal examination forced out Vernon's top officers (one of whom gave himself a $200,000 loan on the way out the door...
...In August 1984, FSLIC slapped Vernon with a "supervisory agreement" to correct its sloppy loan procedures...
...Wright suddenly reversed himself in April 1987, when FSLIC brought a fraud suit against Vernon Savings and Don Dixon...
...As portrayed by Wall Street Journal reporter Brooks Jackson in the important new book Honest Graft (Knopf), Coelho was a contradiction, engagingly open about his Campaign Committee yet willing to ignore legal restraints in accepting Dixon's help...
...Vernon's books are a catalogue of sleazy thrift-owners who sold each other bad loans to prettify their own balance sheets...
...It's their job to protect the deposit insurance fund...
...It's no longer the product of regional recession, or declining oil prices...
...But Dixon and Vernon had even more surprising clients...
...Shenker, formerly the lawyer for Jimmy Hoffa and the Teamsters Central States Pension Fund, has, however, never been convicted of a crime...
...The thrift backed off...
...Much of the foregoing was uncovered by Allen Pusey of the Dallas Morning News...
...The Dixons moved in, rent free, during June 1985 and spent nearly $200,000 from a special Vernon account to furnish it...
...So they try to bolster their cash flow by attracting more depositors...
...St Germain's staff lobbied the Federal Home Loan Bank Board (parent of FSLIC) to approve the conversion of Greene's thrift to a stock corporation, and St Germain subsequently bought 1,500 shares of the stock...
...According to a Justice Department indictment, up to twelve women, including two flown from Dallas, were paid to provide sexual favors during a three-day Vernon board meeting in San Diego in June 1985...
...When Vernon tried to foreclose on the projects, Barnes and Connally warned "it was a bad business move because it ruins their business relationship...
...flew to London to consult with an interior decorator and buy $489,000 of furnishings...
...Don Dixon was a man of expensive tastes...
...The Texas thrift crisis should well be making a growth industry of on-site document disintegration...
...Its leader, Mario Renda, apparently pioneered the technique of linking deposits to some reciprocal favor...
...One partner was the cabal's Austin lobbyist, a gregarious and persuasive character named Durward Curlee, who lived on the yacht when he came to Washington...
...These congressional party-givers, at a minimum including Texas Representatives J. J. Pickle and Jim Chapman and Coelho himself, may not have realized how deep a swamp they were entering...
...Or we should say since Black tried to speak...
...The Bank Board has been struggling to close the one-third of the nation's thrifts that are now hopelessly insolvent...
...The root cause is the one singled out by the regulators—fraud and mismanagement...
...This is a classic Ponzi scheme, paying your older investors by suckering in new ones, and most people wouldn't fall for it for any number of toasters if it weren't for three things...
...In 1986, Speaker Wright began to hear loud complaints from Coelho, Gaubert, Dixon, and his hometown thrifts about "draconian" meddling from federal examiners...
...that's about 500...
...When the story hit the press, an embarrassed Coelho reimbursed the thrift by nearly $50,000...
...The federal deficit might grind us down in the long run, but the clear and James Ring Adams THE BIG FIX The Savings and Loan Crisis has become the nation's biggest economic problem and—thanks to the United States Congress—its biggest political scandal...
...The thrifts are bankrupt from human failure, not, as the trade associations would like us to think, from an ailing regional economy...
...In mid-1986, as congressmen feted their donors in the yacht's salon, the two very unhappy borrowers bought it with part of a loan intended to refurbish a San Antonio mall...
...In those days, the administration thought it would take $15 billion, to be raised by floating off-budget bonds backed by industry dues...
...In Texas, the heart of the crisis, one economist put the question to his computer, which happened to hold the most elaborate model of the state economy...
...Thomas Gaubert, the big, bluff owner of Independent American Savings and Loan, had become close friends of Speaker Wright and his staff...
...This tabloid lifestyle may disappoint those looking for some grand scheme behind Dixon's corruption, but it's all too typical of the greatest frauds...
...Gaubert gave so much to Coelho's Dtriple-C that he was named its finance chairman, and he harbored hopes of rising to national chairman of the Democratic party...
...A Vernon subsidiary covered the shopping trip by issuing a half-million dollar note...
...When examiners grew too pesky, phone calls to Fernand St Germain, Tony Coelho, and Jim Wright were enough to shoo them off...
...The network of loan swapping was so intricate that, rather than sort it out, FSLIC combined the two with six other thrifts and reopened them as a single new "phoenix...
...From this base, with some interesting outside help, he bought a hometown thrift and embarked on his now notorious financial career...
...From the moment Dixon bought it in January 1982, Bank Board regulators were trying to control its lending...
...D ixon didn't act alone in his misdeeds...
...Some of these "friendly institutions" had their own congressional friendships, neatly complementing Dixon's relations with Coelho...
...Looting through sham loans and phoney expenses looks petty when compared to the grand con game that is keeping much of the financial system in business...
...But there is fraud and fraud...
...Greene left Florida Federal after a series of massive losses, and the FBI and the U.S...
...attorney's office in Dallas won more than one hundred convictions...
...It just doesn't have the money to do more...
...After buying the High Spirits, Dixon sold partnership shares to cronies, Vernon officers, and borrowers, some of whom grumbled that they didn't want it...
...One, bad thrifts offer the highest interest rates in the market...
...The stock loans that Vernon shared with McBirney helped officers of NorthPark Savings Association in Richardson buy control of their institution...
...Dixon covered his walls with Western art, listed on Vernon's books as an asset worth $5.5 million...
...Judicious fund-raising and personal favors gave them the ear of representatives from Rhode Island to California...
...The examiners tried...
...But the Dallas thrifts were passing around their garbage, giving the seller an influx of cash and the buyer a fresh asset that wouldn't start to smell for several months...
...With or without full awareness, a huge majority of the House and Senate voted to withhold the money FSLIC needed to close down the crooks...
...As investigators pull at the strands, they are unraveling a network of fraud and shady dealing far wider and older than anyone had suspected just a few months earlier...
...Vernon sank $13 million into projects with John Connally, former Texas governor, U.S...
...This activity puts a new perspective on the savings and loan crisis, which is clearly the single most immediate threat to economic stability in the United James Ring Adams, a former member of the Wall Street Journal editorial board, is now writing a book on bank supervision under a grant from the Bradley Foundation...
...One of the turning points to the S&L crisis may well have been the decision to raise federal deposit insurance to $100,000 an account, which made it feasible for the brokers to market "jumbo CDs" in that amount...
...Federal studies of recent bank and thrift failures have found that no more than 10 percent can be attributed solely to popular scapegoats like declining oil prices or farm troubles...
...He liked exotic cars, Western art, $2 million beach houses and three-star restaurants in France...
...But judging from FSLIC's fraud suit, and Vernon's own business records, these warnings didn't slow it down a step...
...Why didn't they do their work...
...The remarks on fraud were prepared for a House Banking Committee hearing that then Chairman St Germain abruptly canceled when he learned what Black meant to say...
...of Garden City, New York...
...Chapman's parties on the High Spirits, the congressman's staff replied that election law allowed Curie...
...The yacht deal stinks, but it was hardly Dixon's only breach of banking law...
...They left behind a thoroughly glutted and depressed real estate market...
...And now the shoe dropped...
...The worse off a thrift becomes, the more it depends on this "hot money...
...A witness in one of his trials claimed, without corroboration, that Renda had bragged of handling money for Paul Castellano, late head of New York's Gambino crime family...
...According to Milton Friedman, bank runs triggered the Great Depression, and it's anyone's guess what damage they could do today...
...As a result, said former FSLIC General Counsel William K. Black in June 1987, the "staggering carnage" among fraudulent thrifts like "the Texas 40" explains "virtually all FSLIC's recent and pending major losses...
...The industry fought the plan tooth and nail...
...Congress would spare no more than $5 billion...
...Connally's relations with Vernon may have been the last stage in his descent into personal bankruptcy...
...These ties preoccupy an FBI-IRSJustice Department North Dallas Task Force of eighty agents and staff, the largest single white-collar crime investigation in memory...
...Behind this network stood the peculiar Herman Beebe, a product of the central Louisiana pinelands, who controlled a network of banks, thrifts, and insurance companies...
...With the exception of St Germain, they have been immune from judgment, and they will be for two more years...
...It's worth recalling that Franklin Delano Roosevelt opposed deposit insurance in 1933, on the grounds that sound institutions would wind up subsidizing the bad ones...
...Over the next two years, Dixon took further dream trips to France, England, Ireland, Denmark, and Italy, with frequent side trips to Geneva on undisclosed business...
...Gaubert's thrift shared deals with Vernon, and he had free use of the High Spirits...
...Developers put up, malls and condos just to justify huge loans from compliant thrifts...
...As champagne poured on dinner cruises down the Potomac, the yacht itself was the center of one of Dixon's typically shady business deals...
...On his 1985 jaunt to Italy, Dixon squeezed in stops at both the Bulgari Spa and the Gucci Spa...
...1980, reports Brooks Jackson, the Senate had voted to raise the insurance level to $50,000...
...In the meantime, the Bank Board tightened its supervision...
Vol. 22 • March 1989 • No. 3
