Sorry it took so long to respond, I've mostly been out today and yesterday. Truthfully, my recollection of the S&L crisis is fuzzy enough that I don't want to push any argument about it too strongly. Certainly, as you say, there is plenty of blame to go around, as far as the politics of the situation is concerned. As I recall it, at least, the S&Ls were being squeezed out of their primary business by banks and mortgage companies, and that is why they were potential disasters when RR came into office. They became great disasters when they were allowed to expand into new and more dangerous areas in the Reagan years. But as you said, that expansion had to be approved by Democratically controlled congresses. I don't really have the time (or the interest) right now to look into it more deeply to remind myself of the exact chronology of events or who actually took the lead in these things. Was the RTC really a disaster, given what they had to work with? At least they limited the damage somewhat.
But I think the more general point stands: that the question isn't one of regulation or no regulation, the question is intelligent regulation that both respects markets and has a good sense of the good and bad aspects of human nature, or stupid, short-sighted regulation that basically panders to narrow interests. Of course, telling the difference at any given point in time isn't always easy. |
